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Minnesota Governor Proposes Big Gas Tax Hike

March 27, 2019

Gov. Tim Walz is calling for a nearly 70 percent increase in the state’s tax on gasoline

Minnesota Governor Tim Walz is calling for a nearly 70 percent increase in the state’s tax on gasoline and other motor fuels.

Waltz, a Democrat, proposed raising the excise tax from 28.6 cents per gallon to 48.6 cents per gallon, in his two-year budget plan for fiscal years 2020-2021 released on February 19.

The budget plan is currently under consideration by the state’s legislature, which is split between a Democrat-controlled House and a Republican-led Senate.

Follow the Previous Money

The burden of government in Minnesota is already very high, says John Phelan, an economist at the Center of the American Experiment.

“Minnesotans are already some of the most heavily taxed citizens in America,” said Phelan.

The governor should first examine how the state spent previous funds, says Phelan.

“Before dipping deep into their pockets once more, Gov. Walz should find out what happened to all the money the government has already had,” Phelan said. “The Minnesota state government’s revenues are at near-record highs in real terms and in real per capita terms. On top of this, they have a projected $1 billion budget surplus for the next biennium.

“Yet, Gov. Walz claims that he cannot fulfill a core function like road maintenance without a vast tax hike taking Minnesota’s gas tax from 28th nationally to fourth,” Phelan said.

Declining Revenue Source

Increasing gas taxes is not a long-term solution, says Matthew Glans, a senior policy analyst with The Heartland Institute, which publishes Budget & Tax News.

“Gasoline taxes are ineffective and have increasingly left transportation systems shortchanged,” said Glans. “In recent years, the rise of fuel-efficient cars has decreased motor fuel tax coffers and disproportionately shifted the burden to low-income drivers, a group that typically owns older, less-fuel-efficient vehicles.”

That trend will continue to reduce the current source of transportation funding, says Glans.

“As sales of fuel-efficient vehicles continue to expand, motor-fuel tax revenues will decline more rapidly,” said Glans.

Hayley Sledge (hayley@sledges.us) writes from Dayton, Ohio.