“Everybody uses the road and if some pay and some don’t then that’s an unfair situation that’s got to be resolved,” said Jim Whitty, manager of the Oregon Department of Transportation’s Office of Innovative Partnerships and Alternative Funding.
Ah, yes. As with any number of current governmental activities, the rationale for per-mile taxation will be fairness.
Who’s ready for some politics? With the presidential election still over 14 months away, recent Iowa straw poll winner Michelle Bachmann is upping the campaign promise ante by telling a Greenville, SC crowd
The day that the president became president gasoline was $1.79 a gallon. Look at what it is today. Under President Bachmann, you will see gasoline come down below $2 a gallon again. That will happen.
Without even taking a side in the muck of presidential politics, it’s plain to see how ridiculous this statement is. As Politico helpfully notes:
Bachmann didn’t detail how she would cut the price of gasoline, which is tied to the global price of oil. [Emphasis added]
Personally, I think gas should probably be taxed to a point where Americans pay about what the rest of the world does, in order to pay for the externalities of oil consumption. Most auto execs agree, arguing that America’s artificially low gas prices play hell with product planning. But even (or is that especially) if you’re a hard-core anti-tax free-market fundamentalist, Bachmann’s statement should be treated with scorn. After all, markets, not presidents, should be setting oil prices. But what’s principle (or even good practice) when compared to the need for political pandering?
The average price of regular unleaded gasoline was $3.96 this week, an increase of 38 percent over the same time last year. US Senator Rand Paul (R-Kentucky) on Tuesday proposed to temporarily reduce that cost by 18.4 cent cents by suspending the federal gas tax. Under the freshman lawmaker’s plan, the highway trust fund would be replenished by reducing payments made to foreign governments.
“Let’s have a gas tax holiday,” Paul said in a floor speech. “Let’s take the money from foreign aid and let’s give it back to the American people who worked hard to earn it…. That would help people, that would lower the price of gasoline and that would be a stimulus to the economy.”
With the federal deficit balooning out of control, President Obama’s National Commission on Fiscal Responsibility and Reform has publicized its preliminary proposals, and goodness are there a lot of them. But only one of the commission’s proposals gets to the heart of this nation’s automotive future: a proposal to increase America’s gas tax. Federal fuel taxes currently stand at 18.4 cents a gallon for gasoline and 24.4 cents for diesel fuel, but the commission has proposed a 15 cent per gallon increase, to take effect starting in 2013.
CSM Worldwide seems to think so, telling Automotive News [sub] that new compacts from Ford and Chevrolet are being pushed into the market to comply with increasing fuel-efficiency and CO2 emission standards. If gas prices stay steady, CSM’s VP for Forecasting, Michael Robinet says “extreme pressure to channel smaller vehicles in the market due to CAFE and emissions standards will raise incentives and lower profitability.” “It is very possible that U.S. automakers will not achieve their objectives of selling small cars at a profit,” adds CSM CEO Craig Cather. The crux of the argument is that CAFE ramp-ups to 35.5 MPG by 2016 create incentives for automakers to produce small cars without corresponding consumer demand. Luckily there’s a planned gas tax hike for that.
The problem we have is, Congress wants to pass a very robust transportation bill in the neighborhood of $400 billion or $500 billion, and we know the highway trust fund is just deficient in its ability to fund those kinds of projects. The highway trust fund was substantial at one time but now with people driving less, and driving more fuel-efficient cars, it has become deficient. To index the federal fuel tax, that’s something Congress is going to have to decide. As we get into the reauthorization bill, the debate will be how we fund all the things we want to do. You can raise a lot of money with tolling. Another means of funding can be the infrastructural bank. You can sell bonds and set aside money for big projects, multibillion-dollar projects. Another way is (charging a fee to motorists for) vehicle miles traveled. The idea of indexing the taxes that are collected at the gas pump is something I believe Congress will debate. When the gas tax was raised in 1992 or 1993, in the Clinton administration, there was a big debate whether it should be indexed. At that time, they thought there’d be a sufficient amount of money collected. Now we know that isn’t the case. That is one way to keep up with the decline in driving, and more fuel-efficient cars.