The proposed 10-cent-a-gallon gasoline-tax increase moving through the Minnesota Legislature could end up being higher than that, maybe more than twice as high.

Tucked away in a big transportation funding bill being fast-tracked to a Senate floor vote today are future increases in Minnesota's gas tax that could push it from 20 cents a gallon to more than 40 cents over 10 years, higher than any state's current bite at the pump.

"I'm not trying to fool anybody," said Sen. Steve Murphy, DFL-Red Wing, sponsor of the measure that would increase funding for roads and transit by $1.5 billion a year once it was fully implemented in the next decade. "There's a lot of taxes in this bill."

The dime-a-gallon bill has escalators tied both to inflation and to debt service for roads (which I would think is a shot at Governor Pawlenty's philosophy to use debt to pay for transportation.) At a press conference yesterday Republican House Leader Marty Seifert passed around a spreadsheet showing the effect of all these tax increases on families in the metro and outstate. Many of the taxes listed -- running more than $500 per family per year -- would be in the Murphy legislation. He's right; there IS a lot of taxes in this bill. And they'd only go up over time with the escalators.

UPDATE: Pscymeistr notes some bad economics in Sen. Murphy's assumption that Exxon would pay the excise tax. As I noted Wednesday, the assumption of the tax incidence study that the Department of Finance creates is that 54.6% of the gas tax is borne by consumers, and only 44% of it is borne by businesses (shared down the supply chain, so the part Exxon feels is a fraction of that 44%.) Thus the share borne by consumers of a 10 cent increase on gas is 5.46 cents, and gas stations receive 4.4 cents less. (The rest is paid by non-resident households and firms.)

Labels: legislature, Minnesota