End of the Gas Tax?

End of the Gas Tax?

 

   As the country once again faces a deadline with respect to authorization for federal surface transportation funding of September 30th, some interests are advocating that the authority to collect the 18.4 cent per gallon federal fuel tax (and other fees that are deposited in the Highway Trust Fund) be allowed to expire.  An expiration of this authority will cost the country’s transportation system about $100 million per day.  Clearly any failure to extend SAFETE-LU will be disastrous for Minnesota.  

Fortunately, Grover Norquist announced today that he does not view an extension of the existing gas tax as a tax increase or breaking the anti-tax pledge. See story here

We hope the issue of extending the current federal gas tax will not be controversial. This editorial from the New York Times sums up the situation well:

 

"Unless Congress extends it, the 18.4 cents-a-gallon federal gas tax will expire on Sept. 30. Allowing that to happen would be tremendously destructive. It would bankrupt the already stressed Highway Trust Fund, with devastating effects on the country’s highways, bridges, mass transit systems and the economy as a whole.
Reports suggest that some House Republicans may push to let the tax lapse or use the threat of expiration as leverage in the budget wars. This is a dangerous idea. If anything, the tax should rise to maintain a system that constantly needs upkeep — the backlog of bridges needing repair is estimated at $72 billion — to create jobs, and to encourage drivers to buy more fuel-efficient cars.

Excise taxes on motor fuels account for nearly nine-tenths of the $37 billion trust fund. The fund has lately required annual infusions from the Treasury Department to break even, and its obligations are growing. The gas tax has not increased since 1993, and its buying power, accounting for inflation, is now only 11 cents. Meanwhile, Americans are driving many more miles, placing greater stresses on the highway system.

When state taxes are added in, Americans pay, on average, about 43 cents per gallon in taxes — or about one-eighth the total price at the pump. That’s still a bargain compared with other industrial countries. Across Europe, drivers pay twice what Americans do at the pump — and well over half of that is taxes. In Britain, the tax bite is more than $4 a gallon, or 10 times what Americans pay.

Though opponents will inevitably rail about taking money from the pockets of Americans in recessionary times, using gas-tax receipts on public investment puts that money right back into the economy. And ways can be found to cushion the blow for poorer and middle-class workers who depend on their cars by providing off-setting tax breaks through the earned income tax credit.

For both budgetary and environmental reasons, moderates from both parties have recommended increases in the tax. The Simpson-Bowles commission on budget reform urged an immediate 15 cent-per-gallon increase; former Senators Bill Bradley of New Jersey and John Danforth of Missouri have suggested a $1 increase to be phased in between now and 2020.

The loudest voices for ending the gas tax are coming from the right. Grover Norquist, the president of Americans for Tax Reform, said his group would ask legislators to consider ending the gas tax “cold turkey or phasing it out as soon as possible.” But this is not exclusively a conservative phenomenon. There is something about the words “gas taxes” that drives otherwise sensible people to say silly things. In the 2008 campaign, when gas was around $3.60 a gallon, both Hillary Rodham Clinton and John McCain suggested a “gas tax holiday.” Barack Obama derided the idea then as a gimmick that would do little for consumers and nothing to end America’s dependence on foreign oil.

Before Congress starts running with another very bad idea, President Obama should press to extend the tax now. And he should start explaining why — for the sake of the economy, the environment and a functioning transportation system — this tax will need to rise."

 

Here are other stories about this issue:

Transportation Officials Await Gas Tax's Fate 

Raising the Gas Tax Could Jumpstart The Economy 

Transportation Deadlock Worries States