Federal taxes on highway fuels haven’t been raised in 20 years. Because of inflation and better fuel economy, the Highway Trust Fund, into which those taxes flow and out of which transportation funding is dispersed, faces a shortfall. Standing next to labor, construction and business leaders, Rep. Earl Blumenauer (D-Ore.) announced that he has introduced legislation that would raise the federal tax on gas to 33.4 cents per gallon and on diesel to 42.8 cents.
“Every credible independent report indicates that we are not meeting the demands of our stressed and decaying infrastructure system — roads, bridges and transit,” Blumenauer said. “Congress hasn’t dealt seriously with the funding issue for 20 years,” the congressman continued. “With inflation and increased fuel efficiency, especially for some types of vehicles, there is no longer a good relationship between what road users pay and how much they benefit. The average motorist is paying about half as much per mile as they did in 1993.”
The American Automobile Association supports the proposal. “Though it would be easier to simply kick the can down the road, today’s proposed legislation takes a necessary step forward in fostering debate on an important issue that many policymakers have been reluctant to address,” said Kathleen Bower, vice president of public affairs for AAA. “The country desperately needs additional funding for infrastructure and, for the moment, there is no better means than the fuel tax. The proposed increase is well overdue and in line with what most experts suggest would be appropriate.”
While states levy their own fuel taxes, about half of transportation funding in the U.S. comes from the federal government. The trust fund no longer brings in enough money to cover its obligations so to fund the federal transportation bill currently in effect, which expires in 2014, Congress had to move more than $50 billion in general tax revenue into the fund. Estimates cited by Rep. Blumenauer say that the trust fund will need $15 billion more each year if Congress decides to keep funding at current levels in the next transportation bill. He said that implementing a $0.15/gal tax over three years would raise approximately $170 billion in the next decade.
If the fuel taxes are not increased, Congress will have to choose between cutting transportation funding at the federal level and moving that tax burden to the states, or funding the Highway Trust Fund with general tax revenue.
The American Society of Civil Engineers said last month that the U.S. needs a $2.7 trillion investment in transportation and other infrastructure by 2020 to keep the United States competitive in the global economy. The Federal Highway Administration has estimated that just to keep our current infrastructure safe, highways and bridges will need more than $70.9 billion worth of repairs.
In the Senate, Barbara Boxer (D-Calif.), chairwoman of the Environment and Public Works Committee, has proposed changing the way taxes are levied on fuel, moving the tax to the wholesale level rather than at the pump.