'Bad policy': Minnesota lawmaker says Walz gas tax increase will hurt lower-income residents the most

The top Republican lawmaker on the Minnesota legislature’s tax committee is slamming Gov. Tim Walz, over “bad” and “lazy” tax policy pertaining to the state’s excise tax on gasoline, which the lawmaker indicated hurts lower-income residents in his state the most. 

“There’s generally some pretty strong resistance to putting anything on inflators, because that – I call it the ‘lazy man’s tax increase’ – because what you do then is you never have to come back through the legislature to justify another tax increase,” said Rep. Greg Davids, the top Republican guiding tax policy in the state. “Some rich person, if [the excise tax] is on an inflator and it goes up 10 cents a gallon, they say, so what? But for the person in the district I represent, that drives 35 miles to work at the Mayo Clinic in Rochester, or different jobs in Rochester, that’s a lot of money, and now it goes up every year, no matter what.”

Davids has been on the state legislature’s tax committee for nine terms, including three as chair and four as Republican lead, and he argued Friday that the decision to tie the state’s gas tax to an index was “very poor tax policy,” citing its regressive nature and the fact that it is “hurting the poorest of the poor” the hardest.

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“I try to stay away from regressive taxes. I try to stay away from inflators,” Davids said. “Because if your cause is good enough, you’ll get your increase. But to put something out there, where it just happens with no representation of the people, that’s bad tax policy in my estimation.”

In 2019, Walz’s first budget proposal as governor intended to increase the state’s gas tax 70%, which would have made the state among those with the highest gasoline excise tax in the nation, behind California, Pennsylvania, Washington and Illinois. The proposal was passed by the Democrat-controlled House but stalled once it made it to the Senate. 

Later, during an election year in 2022, Walz called on the federal government to suspend the federal excise tax on gasoline. Minnesota Republican Party Chair David Hann called the move a “laughable political stunt” at the time, considering that Walz and his Democratic–Farmer–Labor Party (DFL) colleagues have “always supported” increasing the gas tax. 

Currently, Minnesota’s gas tax ranking is on the lower end of the spectrum, but that will change after next year’s index increase. Such an increase will move Minnesota up the list 11 spots, making it the 21st-highest in the nation.

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Under Walz, the state of Minnesota did see tax cuts for the middle class, such as an increased child tax credit and reducing the Social Security tax rate. However, Davids questioned what Walz and his fellow DFL members did to squander a record high nearly $18 billion budget surplus in 2023. Meanwhile, by 2026, the state of Minnesota is expected to see a roughly $1.5 billion deficit, Davids said.

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Other measures under Walz included efforts to increase taxes on corporations and the wealthy, such as a new “surtax” on long-term investment income.

The Tax Foundation, a nonpartisan tax policy nonprofit in the nation’s capital, called Walz an “outlier” when it comes to his tax policy, compared to those of Harris’ other potential running mates, including Pennsylvania Gov. Josh Shapiro and Kentucky Gov. Andy Beshear. 

“Governors bring executive experience. They also bring policy records that are more concrete than those of legislators, in the sense that a governor’s signature or veto makes (or prevents) law in a way that one vote in Congress rarely does,” the Foundation wrote in a report published several weeks ago outlining Walz’s tax policy as the governor of Minnesota. “Observers will doubtless scrutinize Walz’s record as governor to get a sense of what policies he may favor at the federal level and what that may say about the Harris-Walz ticket.”