HB 173 Gas Taxes, New Funds and Distribution

Why NM Legislators Should Vote for HB 173

 

HB 173 Gas Taxes, New Funds & Distributions

 

Summary: Sponsored by Rep. Matthew McQueen, this bill would impose surtaxes on gasoline and special fuels and devote the proceeds equally to the state road fund, to a new clean infrastructure fund, and to a new gas surtax low-income rebate fund. It would encourage fuel efficiency, provide funding for cleaner infrastructure, and mitigate the regressive effects of fuel taxes at the same time. A surtax of 10 cents would be added beginning July 1, 2021, with another 5 cents added per year, reaching a surtax of 30 cents on July 1, 2025, and further increases left to be calculated in subsequent years.

History: The NM gasoline tax has been flat at 17 cents/gal since 1995, though the price of gasoline has doubled since then (in real terms it’s up by about 25%). For most of the 20th century, the tax on gasoline was between 15% and 20% of retail price. Today, in our state, it has fallen to 7% (and in 2011, when gas prices peaked, it was less than 5%). By comparison, the Federal government imposes 18.4 cents/gal., and the average state and local tax is about 35 cents, or double the NM rate. (Only three states have lower rates:  AK, HI, and VA. Two have the same rate: OK and MO.) OECD data show that in the 34 most advanced economies of the world, the average tax rate is $2.62 per gallon (2015).

Efforts to increase the gasoline tax in New Mexico have consistently failed. In 1993 it rose to 22 cents but was cut to 20 cents the next year and to 17 the year after that. In 2017, 2018, and 2019, at least ten bills to raise the gasoline and special fuels taxes by 5, 6, or 10 cents, to index the tax to inflation and to allow local option gasoline taxes, have been introduced and have died. The local option bill was pocket vetoed by Gov. Martinez.

Why This Bill Is Good for NM

  • This bill will fund direly needed state road maintenance -- we have among the lowest gas tax and 3rd worse road conditions in the U.S.
  • It will fund clean transportation infrastructure like public transit, electric vehicle expansion, green belts, bike paths, and more.
  • HB 173 will be equitable by providing a tax credit protecting low to moderate income residents.
  • Higher gasoline tax rates will encourage better fuel efficiency and lower gasoline consumption.
  • This bill will bring a reduction in transportation emissions and $600 million in public health benefits over 10 years.
  • Experience in other developed economies shows that higher gasoline taxes do not impede the economy and do help encourage more frugal fuel consumption and more use of public transportation.
  • Higher gasoline costs do tend to hit poor people harder than others; this bill addresses that concern with rebates to low-income New Mexicans.

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