A group of Iowa business leaders recently voiced their support for an increase in the state fuel tax to pay for much needed road repairs. Speaking in front of Governor Terry Branstad’s Transportation 2020 Citizen Advisory Commission, a wide array of business (subscription required to view link) interest groups called for the fuel tax hike, including the Associated General Contractors of Iowa, Iowa Farm Bureau, Iowa Bankers Association, Iowa Motor Truck Association, and the Iowa Good Roads Association.
The Commission is tasked with assessing the condition of Iowa’s roads and the revenue sources used to pay for those roads. More specifically, the Commission is seeking to address what the state’s Department of Transportation estimates is a $215 million shortfall in transportation spending, relative to the amount of money needed to complete certain high-priority projects.
Most of those who spoke at the July 7th hearing agreed that the best way to address this shortfall would be through an increase in the fuel tax. One virtue of the tax is that it functions like a “user fee” in that those who drive more (and wear down state roads more) pay more to have them maintained and repaired. Advocates for progressive taxes, on the other hand, point out that the gas tax impacts low-income taxpayers most heavily. If the regressivity of the gas tax is mitigated through an expansion of the state’s EITC, however, an increased gas tax could be a very responsible and equitable way of fixing Iowa’s – or any state’s – deteriorating roadways.
Ultimately, it’s refreshing to see these business leaders – a group that too often exhibits a knee-jerk opposition to all tax increases – recognize that new tax revenues will be absolutely essential in bettering the state of Iowa and its roadways. Iowa business leaders are well aware that working roads are the kind of infrastructure that allows them to succeed economically and transport their goods and services around the state. It’s also worth noting that the path being urged by Iowa business leaders is preferable to the one taken just next door in Nebraska, where chronic transportation funding shortfalls have been “addressed” by simply taking money away from education and other public services.
Photo via Will Merydith Creative Commons Attribution License 2.0