ON-Lion Letter
If passed by the state legislature, the centerpiece of Wisconsin Gov. Jim Doyle's proposed transportation budget would cost motorists in the state an additional five cents per gallon, according to a May 2007 Wisconsin Policy Research Institute (WPRI) report.

In February, to improve existing and build new roads and highways, Gov. Doyle unveiled a plan to impose a tax on oil companies annually totaling $272 million that they would be prohibited from then passing on to consumers in the form of higher gas prices at the pump.  Only the companies, Doyle believes, would bear the added imposed costs.

"Of course, that is not what will happen," warn the report's authors, which "details how the new tax, if approved by the Legislature, will indeed by paid by Wisconsin motorists."

The Truth Behind Wisconsin's Oil Company Tax:  Why You'll Pay More at the Pump was researched and written by WPRI senior fellow George Lightbourn and fellows Christian Schneider and Benjamin Artz.  Lightbourn is a former Secretary of the state Department of Administration.

The report includes a basic economics refresher showing that such a "no-pass-through" feature cannot work, given that markets will naturally adjust to the additional costs and pump prices will thus rise.  It properly characterizes the provision as another in a long line of attempted governmental cost controls, the results of which historically have been the opposite of what was intended.  Similar language in past bills, moreover, have been violations of the U.S. Constitution's Commerce Clause.

The Lynde and Harry Bradley Foundation in Milwaukee provides substantial support to WPRI.
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