Economists: Cutting Ohio gas tax would be a mistake

A panel of economists overwhelmingly thinks that a proposal to cut Ohio’s gas tax is a bad idea — both because it will sap state funds for infrastructure and because it will take away incentives to conserve energy.

In 2019, Gov. Mike DeWine pushed for an increase in the state’s 25-cents-a-gallon gasoline tax and got part of what he wanted — a 10.5-cent increase that took effect in July of that year.

Now DeWine’s fellow Republican, Sen. Stephen Huffman, R-Tipp City, is proposing to suspend the increase for five years. He’s signed up 15 Republican cosponsors for the legislation, Senate Bill 277.

Passing the bill would be a step in the wrong direction, the great majority of a panel of 32 economists said in a survey that was published last week by Scioto Analysis.

They were asked if they agreed that “Decreasing state highway spending for the next five years by repealing increases to the state gas tax would create economic benefits that outweigh the policy’s economic costs.”

Fifteen economists said they strongly disagreed, 11 disagreed and four said they were uncertain. Just two agreed with the proposition, but neither gave an explanation in the comment section of the survey.

Some economists who did comment pointed to a straightforward tradeoff: Motorists can either pay higher gas taxes to help the state maintain roads or they can pay more at the repair shop after driving on crappy ones.

“This proposal simply shifts burdens; while motorists save pennies at the pump, dollars will be spent on expedited vehicle depreciation and in repair shops over the five years plus of highway maintenance neglect,” independent economist Key. E. Strong wrote. “The trucking industry with heavyweight, road-decimating vehicles will cash in on savings and cushion their bottom line at the expense of the passenger vehicle drivers.”

However, one economist who was uncertain about the proposed tax suspension said some maintenance costs would be covered with revenue from the bipartisan infrastructure package that President Joe Biden signed late last year.

“Spending from the 2021 federal infrastructure package (Infrastructure Investment and Jobs Act) will at least partially offset the reduced spending,” said Thomas Traynor of Wright State University. “I would need more granular information to be able to answer the question, and that is not available yet.”

Cort Rodet of Ohio University wrote that gasoline taxes are not only an efficient way to get the people who use roads to help maintain them, they’re also a tool to address the existential threat of climate change.

Research “shows (gas taxes) are a better means of addressing climate issues than are fuel standards,” Rodet wrote. “Furthermore, I doubt the benefit to individual households of freezing tax increases will be substantial. If the average household consumes 1,200 gallons of gas per year and pays $0.28 per gallon in taxes, that implies a total gas tax bill of $336 per year per household, which is about 0.5% of the average Ohio household’s income. Stopping increases will not do much for the average household, while it could mean roads and improvements fall by the wayside.”