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December 2013 Policy Study, Number 13-10


Fuel Tax:  What Is a Fair System for Iowa?





Iowa’s approach to addressing our transportation issues has been twofold. First, Governor Branstad made the IDOT examine their process and figure out how to implement significant cost saving measures. This is important for every aspect of government. The IDOT has to come up with $50 million in savings, which is the equivalent of a fuel tax increase of 2 ½ cents.[51] But for the second part the loud voices so far are pushing for the raising of taxes and fees on Iowa residents. The IDOT has finally released a proposal to address funding shortfalls without increasing the fuel tax.


Some of the highlights that are in the best interest of the state would be increasing the oversize/overweight vehicle permit fees, focusing federal funding on the primary road system, and applying state tax on dyed-fuel sales.[52] These ideas are definitely a start in the right direction, but the truth is we still need more long-term solutions.


The proposals in this POLICY STUDY address the way to share the costs with residents and non-residents. The residents of Iowa need long-term solutions that will address the issues of our roadways. Continuing to increase the fuel tax is only a temporary solution, since you can only raise taxes so far until you reach the point of diminishing returns. Iowa has to be bold in our approach and look at the private sector for ways to address these issues.


Clearly the private sector in Iowa has been doing more with less and figuring out ways to expand. Now is the time for Iowa to take the lead. Challenge your elected officials to demand an option for paying for road improvements that doesn’t rely solely on Iowa residents and ask them to look at private-sector options that help solve our problems of crumbling bridges and roadways.




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