If you had an extra $40 for every person in your household, what would you do with it? Save it? Spend it? A little of both? Governor Parnell is proposing a suspension of the 8-cent per gallon gas tax for two years in order to give Alaskans a break off a truly regressive tax.
By regressive, I mean that it hits some of the lowest-income citizens, those who can least afford it. There’s no break on the tax based on income level or ability to pay. As of this writing, the average price for a regular gallon of gas in Alaska was hovering at $4.18 while the rest of the country was paying an average of $3.75.
Fuel taxes hit Alaskans doubly hard – not only at the gas pump but on all of our goods that are delivered by plane, ship or truck. Merchants add this cost onto the price of products we buy.
Senate Bill 41 and House Bill 102 offer relief from marine and aviation fuel taxes as well, similar to the one-year suspension Governor Palin initiated in 2008. The Attorney General’s office noted that when enacted, there was an immediate drop in prices at the pump.
There has been bipartisan support for the suspension. While some have said it doesn’t go far enough, many recognize that any tax relief is good for Alaska because that $42 million would be re-injected back into the economy, where it would multiply five to seven times, stimulating the economy in much the same way Permanent Fund Dividends or Native corporation shareholder checks do when they are issued.
Forty-two million dollars works out to about $40/person, which may not seem like much to some but to many households, particularly our rural families, it is a lot. Multiply that by an average family of four and you have $160 savings. Add in the lower aviation costs and lower cost of shipped goods, and you are making a positive impact on people’s pocketbooks.
I’ve heard some say that Congress will give us less money for transportation if we enact a tax break. They said the same thing when we instituted the Permanent Fund Dividend, but it didn’t change the formula. Several states have lowered their gas taxes and it didn’t change their state’s share of federal funding either.
Let’s give Alaskans a break by suspending the motor fuel tax for two years. It is good for Alaska. I ask your support of HB 102 and SB 41.
Marc Luiken is commissioner of the Alaska Department of Transportation and Public Facilities.