Study indicates transportation tax positive for state economy

JEFFERSON CITY, Mo. -- Weighing the pains of higher taxes against the gains of government spending, a university study concludes that a proposed transportation tax increase would benefit Missouri's economy.

Proposition B on the Aug. 6 ballot asks voters to raise state fuel and sales taxes by an estimated $483 million annually.

Taxes are considered a drain on the economy. But spending on road construction, and the secondary spending that it encourages, is considered a gain for the economy.

The short-term net economic effect for Missouri would be about $295 million annually, according to the study released Monday by the University of Missouri-Columbia's Community Policy Analysis Center.

"The economy is not going to be hurt by taking the taxes and then spending them," said center director Tom Johnson. "The economy will actually be stimulated a little bit."

But the benefits may not be spread evenly throughout the state.

Because the spending occurs through the construction industry and its employees, communities with lots of construction firms are likely to see a greater benefit, even if the construction projects occur elsewhere, Johnson said.

"Transportation investments shift economic activity from one place to another," he said. "As a result, not all places benefit from transportation investments."

Johnson said he could not say specifically which areas of Missouri would benefit the most.

The study was undertaken by the center without the sponsorship of supporters or opponents of Proposition B, he said.