Governor Locke's Latest Gas Tax Hike Could Backfire, Taxpayer Group Warns

3/31/2003

From: John Berthoud, Pete Sepp, or Maureen Tell, 703-683-5700, all of the National Taxpayers Union

ALEXANDRIA, Va., March 31 -- Governor Gary Locke's proposal on for a four-cent gas tax increase is no more economically or politically viable than the nine-cent hike voters rejected five months ago, according to the non-partisan National Taxpayers Union (NTU). The group has 335,000 members nationwide and more than 12,000 members in Washington.

"The Governor's latest plan to hike gasoline taxes, not to mention any Legislative proposal to raise taxes even further, can't alleviate the state's transportation woes or its economic doldrums," said NTU President John Berthoud. "Cutting voters out of the process won't change the harsh reality that higher taxes, no matter how they're packaged, will tighten the pinch at the gas pump during the worst possible time."

Last fall's defeat of a fuel tax ballot measure in Washington was no aberration. Voters across the country, from Missouri to Northern Virginia, soundly defeated tax increases in 2002 that would have been earmarked for transportation.

In addition to public opposition to gas tax hikes, there are also economic studies proving that such tactics often lead to fiscal problems. One such study is Solutions to the States' Budget Ills published by the National Taxpayers Union Foundation (NTUF). The study author, Berthoud, reviewed a range of research showing a strong causal relationship between higher taxes and poor economic performance. States which enacted tax hikes during the last budget crisis (in the early 1990s) experienced slower income, employment, and population growth during the ensuing decade, which in turn only fueled the fiscal problems that the new taxes were supposed to cure.

According to a study by the National Federation of Independent Business (NFIB) that monitored the increase in inflation-adjusted, per capita state spending between fiscal year 1977-1978 and 1999-2000, Washington's spending increased by almost half (46.4 percent). And, according to the Fiscal Survey of States, Washington officials have already proposed $27.2 million in taxes for fiscal year 2003. Berthoud believes that both these factors should lead lawmakers to reject further tax increases, and instead focus on re-adjusting budget priorities to focus on any legitimate transportation needs.

"Governor Locke's recent resistance to general tax hikes is a commendable first step, but overburdened taxpayers deserve a more solid guarantee," Berthoud concluded. "As much as elected officials try to stress the difference between general operating funds and those set aside for specific projects, both kinds of expenditures tend to come from the same citizens' pockets."

NTU was founded in 1969 to work for lower taxes, the elimination of wasteful spending, and more accountable government at all levels. The National Taxpayers Union Foundation (NTUF) is its research affiliate. More information, including NTUF Policy Paper 140, Solutions to the States' Budget Ills, is available online at http://www.ntu.org.