States Struggle to Fill Transportation Funding Gap
Many states face a growing problem: a lack of funds to maintain and improve their transportation infrastructure. With only three states boasting dedicated revenue streams for transportation upgrades, others are forced to patch funding holes with money from general budgets.
Retail Delivery Fees: A Flawed Fix
In response, some legislators have proposed retail delivery fees as a partial solution. These fees, levied on deliveries by companies like Amazon Delivery, Uber Eats, and DoorDash, seem like an easy way to tap into a growing sector. However, this approach comes with several drawbacks.
Burdening Consumers and Businesses
Firstly, the cost will likely be passed on to consumers, potentially impacting those who rely on delivery services, such as the elderly, disabled, or low-income individuals. Secondly, local retailers could be placed at a disadvantage compared to non-local competitors who don’t use delivery services. Exemptions for small businesses may not be enough, especially with razor-thin profit margins in the delivery industry. This could lead to higher delivery costs and reduced demand for locally delivered goods.
Double Taxation and Administrative Headaches
Thirdly, these fees act as a form of double taxation for delivery companies using gasoline or diesel vehicles, who already pay fuel excise taxes. This unfairly advantages companies using electric vehicles. Finally, the administrative burden for both businesses and the state is significant. Businesses must modify invoicing systems and track deliveries, while states need to set up separate accounts for each retailer and monitor compliance. Exemptions for certain goods further complicate this process, especially for smaller businesses.
Better Solutions on the Road Ahead
While retail delivery fees offer a tempting short-term solution, they create more problems than they solve. A more efficient approach would be to increase gas taxes to reflect current spending needs and adjust for fuel efficiency. Alternatively, states could consider a per-mile charge, ensuring drivers pay in proportion to their road usage. This “pay-as-you-go” system aligns with the principle of fair taxation. While exemptions might be tempting, minimizing them would keep rates lower for everyone. As a temporary measure, higher registration fees on electric vehicles could be implemented to ensure they contribute to road maintenance.
The Takeaway
Lawmakers need to consider the long-term consequences of retail delivery fees. This approach is inefficient and unfair. Instead, they should explore solutions that ensure a sustainable and equitable funding stream for our transportation infrastructure.