How Indiana shapes up if increased gas tax occurs

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TERRE HAUTE, Ind. (WTHI) – Indiana House Republicans revealed a plan this week to fix roads.

They’re looking to taxpayers to foot the bill by increasing the gas tax by 10 cents. Indiana’s gas tax is currently 18 cents but lawmakers are proposing it increases to 28 cents.

News 10 took a closer look at the impacts of this potential tax increase to see if it will drive gas sales down.

If you increase gas prices by 1%, drivers will only buy 0.03% less of gas according to Rose-Hulman Institute of Technology’s economic professor Dale Bremmer.

This means, consumers need their gasoline and aren’t really affected by a price change.

Since gas consumption will hardly change from the increase in price, the government estimates they will generate $166 million from this tax.

“In the short run, an increase in construction and infrastructure would lead to an increase in employment and state output,” said Bremmer.

This means an increase in construction crews and state spending would benefit the state temporarily.

New roads and bridges could also promote long-term benefits according to Bremmer.

These include attracting and maintaining new businesses to the area.

“Maybe with improved infrastructure a firm like Carrier would be less likely to go overseas,” said Bremmer.

In contrast, another long-term impact of this gas tax means less money for other programs in Indiana.

“How are we in terms of education money, how are we in terms of state health programs?” said Bremmer. “Because somewhere in there, there must be a ranking of money in which programs should get the money.”

If the legislation passes the general assembly, gas purchases won’t change much.

An increase in employment and state spending in the short term would occur.

In the long run, improved road infrastructure could attract and keep new businesses.

There would potentially be less money for other state issues like education and health programs.

The plan was filed Wednesday but still has miles to go before a final vote. It could be April before that decision is made.