Get Ready for a Hike in the Federal Gas Tax
Policy + Politics

Get Ready for a Hike in the Federal Gas Tax

A bipartisan group of lawmakers has come together around a politically risky plan to restore funding for the nation’s highway infrastructure. They would raise the federal gasoline tax and peg any future increases not to the whims of Congress – but to the rate of inflation.

Finally, there’s a growing sense of urgency on Capitol Hill to address the shortfalls in the federal Highway Trust Fund, which will run out of money at the end of next month. The fund’s primary source of revenue is the federal gas tax of 18.4 cents per gallon, which Congress hasn’t raised since 1993.

Related: Get Ready to Pay More Tolls if Infrastructure Isn’t Funded

In the more than 20 years since it was last adjusted, Americans have switched to cars that use less gasoline and in some areas have begun driving less. The fund, then, is taking in far less than it needs to spend every year just to keep the country’s highways in good repair and to make necessary improvements and additions.

The bill introduced this week, called the Bridge to Sustainable Infrastructure Act, has the backing of members of both parties, including Reps. Jim Renacci (R-OH), Bill Pascrell (D-NJ), Reid Ribble (R-WI), and Dan Lipinski (D-IL). It would peg the tax to inflation so that the trust fund revenue retains its rough purchasing power. 

“We refuse to pass on the liability of our deteriorating roads and bridges to our children and grandchildren,” the four lawmakers said in a statement. “The longer we wait to fix our crumbling infrastructure, the more it will cost in the long run. We need to act now to fix the broken system. The users of our roads, workers, and state and local governments need the certainty that adequate and timely transportation program reauthorizations and funding provide.”

They added that the bill “allows for the consideration of all viable options so that Congress can get serious about finding a long-term, sustainable solution for the Highway Trust Fund.” 

Recognizing the general unpopularity of hiking gas taxes, the bill offers Congress a way out by creating a bicameral Transportation Commission charged with “determining a path forward for sustainable funding, and would be advised to consider all options.” 

Related: $478 Billion Infrastructure Bill Blocked by Senate GOP

Yet the lawmakers noted, “Unfortunately, because Congress rarely acts without an ‘action forcing event,’ Congress will be required to enact the recommendations of the commission, or any other funding mechanism that achieves at least three years of funding for the Highway Trust Fund, by December 31, 2016. 

If lawmakers can’t manage that, an automatic tax hike kicks in designed to support the trust fund for three years. If Congress still doesn’t act, another hike would be triggered in 2020, delivering another give years’ worth of funding.

In a letter to Rep. Renacci, the U.S. Chamber of Commerce executive vice president for government affairs, Bruce Josten, wrote, “The Chamber believes the simplest, most straight-forward, and effective way to generate enough revenue for federal transportation programs in the short-run is by increasing and indexing existing user fees.”

While its members are hopeful Congress will find a more permanent solution for the long term, he added, “The Chamber commends you for offering a solution to end the perpetual HTF crisis that would require Congress to act rather than kick the can down the road. We appreciate your leadership on critical issue and look forward to working with the full Congress to restore certainty to the nation’s highway, public transportation, and highway safety programs.” 

Related: Obama Says China’s Infrastructure Puts U.S. to Shame 

How much traction the bill gets among other lawmakers is unclear. House Transportation Committee chairman Bill Shuster (R-PA) last week told reporters there is no appetite in the current Congress to hike the gas tax.

Others, including GOP presidential candidate Sen. Ron Paul (R-KY), have proposed different methods of saving the trust fund, including a tax on the earnings of U.S. corporations that are held overseas in order to avoid the corporate income tax. A similar proposal has been floated by other Republicans and the Obama administration.

Top Reads from The Fiscal Times: