Indexing of Gas Tax to Inflation Key Issue in Massachusetts Elections

In 2013, the Democrat-controlled state legislature voted to index the tax rate on gasoline to inflation.  A gas tax indexed to inflation could mean the tax increases as often as annually depending on changes with the U.S. Consumer Price Index.  Democrats running for state Legislature seats may learn the cost of that tax in the elections this fall.

Republicans have latched onto the automatic gas tax increases as a key point in their platform for the fall elections.  Their hope is that many voters upset at the prospect of gasoline prices going up annually because of an automatic tax increase will express their outrage by supporting Republican candidates seeking seats in the state legislature.

Charlie Baker, the Republican candidate running of governor of Massachusetts, expressed frustration that the indexed gas tax took the choice of future tax decisions out of the hands of future legislatures.  Baker called the automatic increases a tax without representation from the people.

Democrat supporters of the indexed gas tax knew they were taking a chance when they voted in support of the change.

“Whenever you have the words `automatic’ and `tax increase’ in the same sentence, you’re already on the defensive,” said Peter Ubertaccio, professor of political science at Stonehill College in Easton, Massachusetts.

However, Democrat supporters felt the indexing of the gas tax was necessary to cover increasing costs to repair roads and bridges.

Indexing of Gas Tax May Lead to Closer Election in Race for Governor among Others

“It’s irresponsible for Charlie Baker to oppose a critical source of transportation funding without offering any plan to replace it,” said Steven Grossman, the Treasurer and Receiver-General of Massachusetts who is one of several seeking the Democrat nomination to run for governor of Massachusetts.

Based on historic changes in the U.S. Consumer Price Index, the gas tax would mean a one cent increase in gasoline prices every two years, in addition to any increase in price tied purely to the underlying cost of gasoline.

“It’s a tiny increase,” said Michael J. Widmer, President of the Massachusetts Taxpayers Foundation, an organization that provides non-partisan research and recommendations on tax policies.  “Yet it would generate significant revenue to help the state keep up with road and bridge maintenance.”

The decision to index increases in gasoline tax was accompanied by an initial increase in the gas tax of 3 cents per gallon, bringing the total gas tax to 24 cents per gallon.  The increase marked the first such increase in the gas tax since 1991.

Widmer continue by noting that an automatic increase in the gas tax seemed reasonable, since the tax had not been increased in 23 years and it was unlikely the state legislature would have time to revisit the topic on a regular basis going forward.

One of the Democrat candidates seeking the governor position is Joseph Avellone, the only Democrat candidate who is opposed to the automatic increase of the gas tax.

“As governor, I would be transparent and upfront with the public when advocating additional taxes on the middle class and small business,” said Avellone.  Avellone is considered a moderate Democrat.

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by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.