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Just A Thought 7-16
Will gas tax be revenue neutral?
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The state’s tax changes began going into effect July 1.
Tennessee decreased its sales tax rate on groceries from 5 percent to 4 percent, while increasing its gas tax rate by 6 cents – from 21.4 cents per gallon to 27.4 cents per gallon by 2019. The bulk of the increase goes into effect this year with a 4-cent increase, followed by 1-cent increases in the subsequent years.
Like gas doesn’t cost enough? Every time I fill up my car, I about have a slight panic attack.
The change also affects diesel taxes, increasing them from 10 cents to 28.4 cents per gallon, with a 4-cent increase this year, and 3-cent increases in the following two years, eventually reaching 35.4 cents by 2019.
What really bothers me about those changes is the comment that it’s revenue neutral.
Definition of revenue neutral: “A taxing procedure that allows the government to still receive the same amount of money despite changes in tax laws. The government may lower taxes for one particular group of people, but raise taxes for another group. This allows the revenue that they receive to remain unchanged (neutral).”
Anytime someone says those two words to me, I cringe with extreme doubt. If it’s truly revenue neutral and you aren’t going to receive any extra revenue from doing it, why do it? It defies logic. I think they’ve figured out most people will believe this isn’t a hit to the wallet, if they use those two words. I am not one of those people.
Do you remember a few years ago when the Tennessee Valley Authority announced it would change the way electricity is priced to help cut the peak demand for its power? I do. They were going to charge more for times when people use more electricity.
I went to a meeting at McMinnville Electric System and this really nice lady from TVA gave a presentation about the change and she stated it would be “revenue neutral” for TVA. This, she said, is not a revenue generator but a way to urge people to use less electricity during peak times.
Incidentally, the higher rates would be levied in the morning when most people are getting their day started by cooking breakfast and taking showers, etc., and in the evening after work when they are making dinner and washing clothes, etc.
I waited patiently until the presentation was over and I asked, “If you are charging more for when people are going to use more electricity, how is that revenue neutral?”
She admitted if people do not change when they would be using electricity, their bills would go up.
I stated, “So, this isn’t’ revenue neutral for TVA. It will generate extra revenue because most people can’t change when they use electricity due to their work schedules and their children’s school schedules.”
She said nothing.
I have a hard time believing anything that defies logic. Maybe I’m too logical, but I doubt it.
Standard reporter Lisa Hobbs can be reached at 473-2191.