When Missouri last increased the state fuel tax, in 1996, from 15-cents to 17-cents, the US average total price of a gallon of gasoline was roughly $1.084. The oldest records I could find for Missouri go back to 2003, but our are always less than the national average.
Assuming $1.07 per gallon in 1996, the 17-cent Missouri tax represents 15.89% of the price paid at the pump. In July 2008 Missouri gas prices peaked at $3.96, the state fuel tax representing only 4.29% of the total price paid. Recently Missouri’s average was $3.28/gallon, the fuel tax representing 5.18% of the total price per gallon.
How much would gas cost today if Missouri’s fuel tax was 15.89% of the total? To answer this we must do a series of calculations:
$3.28 – $0.17 = $3.11 (cost before Missouri tax)
1 – 0.1589 = .8411 (cost before Missouri tax = 84.11 % of total)
$3.11 / 0.8411 = $3.6975 or $3.70 (current cost if Missouri tax is 15.89% of total)
$3.70 – $3.11 = $0.59 (Missouri gas tax if 15.89% of total)
So there you have it, a gallon would cost $3.70 and the Missouri tax would be 59-cents. At 17-cents we’re only collecting 28.8% of the funding we did in 1996, relative to the total cost of a gallon of gas. To get to 59-cents we’d need to raise the tax 42-cents, or 347%! I’m not advocating we raise the state fuel tax this much, doing so would make ours the highest in the country. The purpose of this exercise is to show that relative to 1996 our revenue is about a third of what it was the last time our fuel tax was increased. A third!
In 1996 the average fuel economy of a new car was 28.5 mpg. Driven 15,000 miles per year the driver would buy 526.3 gallons of gas for a total cost, ignoring fluctuations in price, of $568.40. Of this, Missouri would’ve received $89.47. The average fuel economy for a 2013 model car is 36 mpg, a substantial improvement. Driven 15,000 miles per year the driver would buy 416.7 gallons of gas for a total cost, ignoring fluctuations in price, of $1,366.78. Of this, Missouri would’ve received $70.84. Eighteen years later the driver spends 140% more on fuel, but Missouri receives less. Of course, with inflation the cost to maintain roads & bridges is higher nearly two decades later.
As I’ve said previously, if we’d continue to raise the fuel tax 2-cents ever two years, like we did 1992-1996, we’d now be at 34-cents. Our bridges & roads would’ve been funded and maintained all along.
If our state tax was suddenly doubled from 17-cents to 34-cents the total price of a gallon would be $3.45, instead of the current $3.28. The 34-cent tax would be 9.855% of the total cost of a gallon. Not as much as in 1996, but much better than today. Diesel fuel taxes need to be raised in a similar manner.
In the same example as above the driver of the 2013 car would still need 416.7 gallons, but now the total cost would be $1,437.62. Missouri would receive $141.68 from this motorist to maintain the bridges & highways.
The question now is how quickly can/should we raise the fuel taxes?
— Steve Patterson