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State Transportation Budget Raises Gas Taxes » Publications » Washington Policy Center

To claim: “I promised that we would not increase gasoline taxes on families in difficulty. …Today we passed a $17 billion package of transportation investments that delivered on my promise. – Senator Marko Liias

Truth: The transport package is directly financed by gasoline taxeswhich represents a tax increase of $5.4 billion over the next few years.

With so much talk about the state moving away from gas-powered vehicles to reduce CO2 emissions, one of the weirdest claims made during the legislative session was that there was no increase gasoline taxes.

Various versions of this claim have appeared.

At best it’s misleading, but in many cases it’s wrong.

The transport package is based in particular on an increase in taxes on petrol, as admitted by the legislative documents and the Ministry of Ecology.

The $17 billion transportation program has several sources of funding. Legislative analysis shows that the largest funding comes from the Climate Commitment Act, the new CO2 cap-and-trade program passed last year (SB 5126).

Senator Liias, who chairs the Senate Transport Committee, even admits that is the case. On February 10, 2022, he tweeted the transport budget is funded by “the bill we passed last year” – SB 5126.

It’s not an accident. Funding for SB 5126 was specifically placed in the Carbon Emissions Reduction Account, which was dedicated to a future transportation package.

Indeed, the transport package specifically mentions the financing of the carbon reduction account.

Where does the money for the Carbon Emissions Reduction Account come from? It comes from a tax on CO2 permits sold by the state. As the Department of Ecology explains, transportation (gasoline and on-road diesel) is the largest category of CO2 emissions in the state. The tax note for SB 5126 shows that transport fuels account for almost 47% of the emissions of the entities covered.

Simply put, the gas tax in SB 5126 was increased for the specific purpose of funding this transportation package.

The tax note estimates that the lowest price for these CO2 permits will be $20.60 per metric ton (MT) of CO2. Each gallon of gas emits 19.4 pounds of CO2 when burned, which translates to 18.3 cents per gallon at $20.60 per MT.

This is confirmed by the California Legislative Analyst’s Office, where they already have the cap and trade system that Washington will implement next year. In 2016 they wrote, “We assume that retail gasoline prices increase by 8 to 9 cents per gallon and that diesel prices increase by about 10 cents per gallon for every $10 per metric ton of dioxide equivalent of carbon that a quota costs.” Washington’s price should start at just over $20.

Legislators know that the CO2 tax increases prices. Indeed, they want to raise gas prices to entice people to switch to electric vehicles. In other words, the rising gas price isn’t a bug, it’s a feature. To address these increases, SB 5126 specifically authorizes funds to offset the rising cost of gasoline and other energy, including programs to “reduce the energy load of low-income people, as well as the higher fuel load for the transportation of rural residents…”

How, then, can legislators like Liias repeatedly say there is no “gas tax” increase? Him and others repeat this message rely on a technique. A “petrol tax” refers to a specific type of tax directly on gasoline that is paid into a dedicated road account. This narrow definition makes the claim that there is no “gas tax” increase technically accurate. However, it is intentionally misleading because the transport package is financed directly by gasoline taxes. For drivers, the difference between a “gas tax” and a “gas tax” is zero.

Liias is clearly trying to use the confusion over the definition of a “gas tax” to mislead people. He says he doesn’t want to impact “struggling families”. For these families, however, there is no difference between an 18 cents per gallon gasoline tax and an 18 cents per gallon gasoline tax.

With gas prices rising dramatically and elections this fall, it’s no surprise that some lawmakers who last year bragged about raising gas prices to reduce CO2 emissions are now claiming that they didn’t. Faced with unfavorable polls, last year’s climate warriors lost the courage of their convictions.

I have been a consistent proponent of putting a price on CO2 emissions that would increase the price of gasoline, offsetting that increase with a reduction in other taxes, such as sales tax. We also support the elimination of unnecessary subsidies to reduce the overall tax burden on Washington families. A carbon tax offset by other reductions would provide an incentive to reduce CO2 emissions, leaving families with more money in their pockets and the opportunity to lower their taxes by becoming more energy efficient. However, voters rejected this approach, in part because they simply do not trust politicians to stick to the deal. And with the deliberately misleading statements of legislators on the taxes that finance the transport package, who can blame them?

Ultimately, the insinuation that the transportation package was funded without raising gas taxes is dishonest, and starting next year, drivers in Washington state will pay the price.