The case to increase Mississippi’s gasoline tax might have just been Trumped going into January’s legislative session.
With President-elect Donald Trump talking about spending $1 trillion on improving the nation’s infrastructure, Gov. Phil Bryant and the Republican supermajorities in the Legislature are less likely to ask taxpayers to foot a bigger bill at the gasoline pump.
Mississippi residents pay 37.19 cents in state and federal taxes on every gallon of gasoline, about 11 cents a gallon less than the national average. The state’s gas tax was last increased in 1987. The federal gas tax has been 18.4 cents per gallon since 1993.
Bryant spokesman Clay Chandler told Mississippi Watchdog that “Gov. Bryant does not want to increase anyone’s taxes, which is why he signed legislation earlier this year that put more money in the pockets of Mississippi families and made the state’s business climate more competitive.”
Last year, Bryant signed into law one of the largest tax cuts in Mississippi history. The law will phase out the state’s corporate franchise tax — which is assessed at a rate of $2.50 per $1,000 of capital or property, whichever is greater — starting in 2018 and eliminate the state’s 3 percent income tax bracket, assessed on the first $10,000 of income. The franchise tax will take 10 years to sunset, while the 3 percent bracket will finally fade away in five years.
One of the pitfalls of increasing the gasoline tax just a year after cutting corporate taxes would be the appearance of shifting the tax burden from corporations to the state’s population as a whole.
Russell Latino, the state director for pro-economic freedom group Americans for Prosperity, told Mississippi Watchdog that the Legislature doesn’t need to be in a rush to increase taxes on working families.
“It would be bizarre and, in my mind, unwise to push for a tax increase before we know what the Trump administration is going to do on infrastructure,” Latino said. “People who ran on being for small government and against tax increases would be making a real mistake to push for tax hikes for infrastructure before we know what Trump’s plans are.”
Also, there’s the question of need. The libertarian Reason Foundation rated Mississippi’s highway system 10th best nationally in terms of performance and cost effectiveness in its annual highway report. The state scored much better than its neighbors, with Tennessee ranking 18th, Alabama 20th, Arkansas 33rd and Louisiana 34th.
According to the report, the state spends $103,706 per state-controlled highway mile, ranking it 14th lowest in the country. Mississippi’s highways and bridges are mid-pack or lower nationally, with the state ranked 23rd in the number of deficient bridges and 32nd in the percentage of rural highways in poor condition.
While Latino doesn’t discount that there are needs in the road system, he says that the “selling of a crisis is not founded on fact” when it comes to the condition of the state-controlled roads.
Last December, the Mississippi Economic Council rolled out a massive public relations campaign to push through a gasoline tax increase, complete with a report detailing the state’s transportation needs. This year, it’s been all quiet on the infrastructure front.
One of the biggest issues with the tax increase proponents was agreeing to a single figure. The MEC, which is the state’s chamber of commerce, said Mississippi needed to spend $375 million more annually on highways. MDOT executive director Melinda McGrath said her department needs $526 million in additional funding annually.
In fiscal 2017, which ends June 30, the state will have spent more than $216 million on highway maintenance and $792 million on new construction.
The battle over a tax increase stretched to April, just days from the session’s end. Several bills died in committee and a placeholder bill, which contained the relevant code sections for the gasoline and diesel taxes, was passed by the Senate for further debate before dying in the House.
This year, it won’t be the Senate originating a tax increase bill, according to Lt. Gov. Tate Reeves’ spokesperson Laura Hipp.
“The Senate passed a bill last session that could have continued the conversation on how to best pay for maintenance of roads and bridges in the state. However, nothing made it out of the committee process in the House,” Hipp said. “I would expect the Senate to give full consideration to any proposal sent from the House to ensure the state provides for the upkeep of roadways in an efficient manner that benefits taxpayers.”