A recent comment thread had the familiar, tiresome morality play about subsidies to drivers and transit. I think the use of “you are subsidized” as a moral critique is totally bankrupt, but nevertheless there appears to be genuine confusion about the sales tax exemption for gasoline and why that’s a subsidy, displayed by people I have every reason to believe are asking in good faith.
The general sales tax levied on most retail goods is not levied on gasoline. This exemption, according to a 2008 Dept. of Revenue report, amounts to an annual revenue loss of $500m to the State and a further $156m per year to local governments (previous post on this subject). Obviously, the precise value moves around with the price and consumption rate of gas, but in any case this is functionally equivalent to the state writing checks to lower the price of gas.
Instead, the state levies a per-gallon gasoline tax of 37.5 cents per gallon, on top of 18.4 cents per gallon by the Federal Government. Although the state portion is roughly equivalent in magnitude to the sales tax, according to the 18th amendment to the state constitution, it must be used solely for “highway purposes.”
This is a crucial distinction. For most other industries, the products are taxed and the revenues flow into the general fund to support education, public safety, and whatnot. For drivers, the revenues must be used to support driving by providing roads that are (mostly) free at the point of use. This is not a neutral treatment of driving, any more than dedicating all taxes on nails to hammer subsidies would be neutral treatment of the hammer industry.
It’s true that gasoline is hardly the only item that is subsidized through the tax code. The list of exemptions is hundreds of pages long, and government applies more traditional subsidies to things like education and transit. There’s even a non-crazy social justice case to be made for a gas exemption, although like the food exemption we’d be better off repealing it and focusing the revenue on targeted assistance to the poor. But anti-transit folks should drop the martyrdom complex that they’re honorably paying their own way while a bunch of parasitic transit riders leech off of them.