Policy Brief: Fuel Tax Changes and the Impact on State Revenue for Iowa

Abstract

his brief focuses on three questions regarding the implications of changes to Iowa's fuel tax policy: What would be the effect of a one cent reduction in gasoline and fuel taxes? What would be the effect of linking the gasoline and diesel tax to inflation in 2014 in terms of annual state fuel tax revenue through 2025? How much additional revenue could have been generated from linking the gasoline and diesel tax to inflation in 2008, the last time Iowa adjusted fuel taxes?

The model used in the analysis shows that linking Iowa's fuel taxes to the rate of inflation could have a substantial impact on the state's ability to maintain its transportation system into the future.