MCLEAN, Va. – The Editorial Board at USA Today published two sets of views last week about the federal gas tax: raise it, or phase it out.
The “pro tax increase” voice notes that without congressional action, highway funding will cease at the end of July, adding that a “simple solution” to funding the nation’s highway projects would be to increase the 18.4 cents per gallon federal gas tax.
“Thanks to a worldwide oil glut, gas prices have dropped so far that Congress could quintuple the gas tax without pushing pump prices above where they were at this time last year. Merely restoring the tax to its 1993 level (a little more than 30 cents in today’s dollars) and indexing it for inflation would be a big start toward a major infrastructure upgrade. And given the volatility of prices at a pump, motorists would barely notice the 12-cent increase.”
The pro-taxers write that Congress has resorted to short-term fixes — “Some 33 such fixes have been passed in the past decade” — as a solution to the cash-short Highway Trust Fund. The Senate’s “patchwork plan,” meanwhile, is “even more ludicrous,” as it “mysteriously finds money throughout the budget by such tricks as claiming unspent funds from the bank bailout and tweaking various taxes and fees.”
Tax-advocates continue that the Senate’s plan also contains “an absurd” plan to auction oil from the Strategic Petroleum Reserve, which would raise cash but also do the exact opposite of what the SPR is supposed to do, “which is to buy oil when it is cheap and abundant and draw it down when it is expensive” and supply is low.
“The gas tax is simple and fair. It hits people who use the roads the most and drive the least fuel-efficient vehicles. Just raise it already.”
On the opposite side of the argument, the “phase it out” side contends that raising the federal gas tax to support the Highway Trust Fund “is like pumping gas into a junkyard car. For every $1 of gas tax, Washington wastes 20% to 30% in needless federal regulations that jack up highway construction costs.”
Instead, the phase-out approach, penned by David McIntosh of the Club for Growth, proposes to fix the system by getting rid of the “federal middleman.”
He writes that this year, “the Highway Trust Fund will spend more than $50 billion, including billions for non-highway projects, and will run at a deficit of more than $10 billion. The primary focus in Congress — as it has been for years — is on finding new ways to fund that deficit, instead of looking for ways to stop the spending that causes the deficit.”
To fix the current system, McIntosh cites legislation authored by U.S. Sen. Mike Lee (R-UT) and U.S. Rep. Ron DeSantis (R-FL) that would phase out the gas tax and give states accountability and responsibility to identify and undertake highway projects. Essentially, the Transportation Empowerment Act would give the states the money and responsibility for road construction and repairs.
As the primary tax collector of the federal gas tax, the convenience and fuel retailing industry has a unique perspective on this debate. Where the revenue will come from and how the tax collection will affect the industry are just a few questions at play. As these discussions progress, such as user fees on mileage traveled and excise taxes on tires and vehicles, to imposing a carbon tax or allowing toll lanes on the federal highway system, NACS will continue to make sure that the industry’s voice is heard and represented.