South Carolina needs to raise its gasoline tax to help pay for vital maintenance on roads and bridges. But using the sales taxes charged on vehicles, as suggested by S.C. House Speaker Bobby Harrell, also could help provide money for infrastructure.
Harrell proposed using sales taxes on car and truck sales to help pay for road repairs. Harrells plan would use the sales tax as an alternative to raising the gas tax.
But theres no good reason the Legislature couldnt do both. And the state will need all the money it can get to keep pace with its crumbling roads.
The state now collects about $100 million a year in sales taxes on car and truck transactions. That money goes to the states general fund, where it helps pay for law enforcement, health care and public education.
About 20 percent of the $100 million goes to the Education Improvement Act, one of the major funding mechanisms for public education. Some lawmakers fear legitimately that if lawmakers spend that money repairing roads, they wont replace the $20 million for education.
However, the state tax on vehicle sales currently is capped. The tax is 5 percent of the total cost of the vehicle or $300, whichever comes first.
This always has been an absurd arrangement. Essentially, the purchaser of a beat-up used car and a brand new one costing thousands more often end up paying $300 in sales taxes despite the difference in value of their cars.
If the cap were eliminated, the tax would produce enough to help fund road repairs and the EIA. Even so, it probably would not be enough to meet road needs.
The state Department of Transportation needs nearly $30 billion over the next two decades to fix the states highway system. That comes to approximately $1.5 billion a year just to keep pace with repairs and ongoing construction.
Federal government analysts and transportation experts have long warned that states have spent too much on building highways and too little on maintaining them. South Carolina is no exception.
The state has the fourth-largest state-maintained highway system in the nation, a system made up of 41,460 miles and 8,357 bridges. And many of those roads and bridges are in a state of dangerous disrepair.
Despite the need to play catch-up on repairs, the states gas tax remains the fourth-lowest in the nation. The tax was last raised in 1987.
Money for road repairs is not likely to come from the federal government. The federal gasoline tax now falls about $14 billion short of meeting the nations highway repair needs each year.
But a slight increase in the states gas tax for the first time in more than 25 years would help produce needed revenues for road repairs. And out-of-state motorists who fill up their cars while visiting the state would add to those revenues.
Both the gas tax and the sales tax on vehicles are, in a real sense, user fees for road maintenance. Both have a direct link to transportation.
Granted, in the states tax-averse Legislature, the likelihood that lawmakers would raise both the gasoline tax and the auto sales tax is slim. Nonetheless, both increases make good economic sense.
Tourism is the states biggest industry, and good roads are essential to enticing people to visit.
In addition, while drivers might be reluctant to pay more at the pump or when they buy a new car, they should consider the cost of wear and tear on their vehicles that results from driving on lousy roads. Consider also the danger of driving on bad roads.
The longer we wait to correct this problem, the more we will pay.