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Proposal Would Increase Federal Gas Tax, Tie It To Inflation

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The federal take at the pump is currently just 18 cents per gallon.
The federal take at the pump is currently just 18 cents per gallon.

The federal gasoline tax, last raised in 1993 to $.18 cents per gallon, would increase five cents per year over three years and have future increases tied to inflation, under legislation proposed Rep. Earl Blumenauer (D-Ore.). With the Highway Trust Fund set to go broke in ten months, the congressman called on leaders of both parties and the Obama administration to raise the tax to replenish the pot of money that pays for rail and road improvements.

“What I am proposing is that we have an adult conversation about how we deal with the pending crisis that is less than 10 months away,” said Rep. Blumenauer. “I’ve been in Congress 17 years working on this issue and there is never a good time. The failure has been bipartisan in nature.”

The politics seem to be working against Blumenauer’s proposal again. The Republican-led House seems unlikely to support any tax increase, and President Obama has opposed hiking the fuel tax. The U.S. Department of Transportation, whose new secretary Anthony Foxx has echoed the administration’s line, did not respond to a request for comment.

“Nobody, the administration, no Republican or Democratic leaders in Congress have come forward,” said Blumenauer.

The current tax of $.18/gallon has lost considerable value against inflation, higher fuel efficiency standards, and fewer vehicle miles traveled. The fact that Americans are driving less and fuel efficiencies will continue to improve makes the gasoline tax an unsustainable funding source, but does not mean Congress should fail to raise it now, Blumenauer said.

“I hope this is the last gas tax increase that Congress ever has to pass,” he said. “I think we need to change the system. Oregon gave you the first gas tax dedicated to highway construction 94 years ago, and it’s been experimenting for the past 10 years with an approach that would be based on vehicle miles traveled.”

In 2001 the Oregon State Legislature created a task force to study the implementation of a “road usage charge,” commonly called a VMT, or vehicle miles traveled, tax. A recent Oregon Senate bill will allow the state’s transportation department to sign up 5,000 volunteer drivers for a mileage collection system in 2015.

Meantime, supporters of a higher gas tax hope to include Blumenauer’s proposal within a larger deficit reduction plan to smooth the way for reluctant members of congress to vote for a tax increase. The Oregon lawmaker has allies, including groups who would directly benefit from the road construction spurred by a replenished highway trust fund: labor unions, contractors, and engineers. But the U.S. Chamber of Commerce is also supporting the proposed gas tax increase.

“We believe that Rep. Blumenauer has chosen the right path. The introduction of his legislation will generate constructive conversation. The Chamber continues to support—as it has for many years—increases in user fees to support federal investment in highways, highway safety, and public transportation” said a posting on the Chamber’s blog.

Whether these groups can convince the leaders of both parties and the administration remains to be seen.

“It has a better chance now than at any time in the past decade primarily because you’ve got a president who is in the last few years of his term, who has the ability to escape the political damage that could come from a gas tax increase,” said Joshua Schank, the president of the Washington-based Eno Center for Transportation, a policy and research group.

While Schank supports increasing the gas tax now and tying future increases to inflation, he does not view the tax as a sustainable funding source. Moreover, a replenished highway trust fund would not necessarily lead to better funding choices on a national level because members of Congress compete for those dollars to fund projects in their own districts, he said.

“It's not a strategic investment method. Most other nations [Western Europe, Japan, Canada] have gas taxes that are actually much higher than ours, but they don't dedicate that money to transportation,” Schank said. “Instead they use general fund revenues to fund their transportation investments, and as a result they tend to make better decisions about transportation investment.”

In recent years $50 billion have been transferred from the general fund budget to the trust fund because the latter keeps running out of money, worsening the U.S. budget deficit.


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