MN House DFL wants to raise the gas tax

Two years ago, Gov. Walz proposed raising Minnesota’s gas tax by 20¢ — a 70 percent hike. The proposal did not pass. House representatives have brought another proposal to raise the gas tax by 5¢ over the next 4 years —  an 18 percent hike.

As reported by the Star Tribune,

House Democrats’ transportation funding bill would raise the tax on a gallon of gas by 5 cents over the next four years. It also increases the motor vehicle sales tax and directs the Metropolitan Council to add a half-cent sales tax in certain Twin Cities communities to support transit. The bill would change how tab fees are calculated and add a luxury vehicle surcharge.

Currently, Minnesotans pay the 30th highest gas tax in the nation, according to the Tax Foundation. If the tax hike passes, Minnesotans will pay approximately 33.60¢ per gallon, outranking our neighboring states.

While lower than Walz’s 70% tax hike of 2 years ago, this new proposal won’t be costless.

For one, gasoline is an essential input in economic activity. Raising the gas tax will raise the cost of providing numerous goods and services. These higher costs will be passed down to consumers through higher prices. Additionally, Minnesotans will also pay more at the pump, with low-income individuals paying more in taxes as a proportion of their income.