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Saturday December 20, 2014

Washington News

Washington Hotline

Gas Tax for Highway Trust Fund?

A surface transportation bill is moving through the Senate. There is a general agreement on the need for funding infrastructure. The American Society of Civil Engineers has rated many of America’s highways, bridges and ports as in need of substantial repair. The surface transportation bill would fund many infrastructure projects.

A key issue is how to pay for the bill. Previously, the federal gas tax has provided funding for the Highway Trust Fund.

A bipartisan proposal was presented by Senator Christopher Murphy (D-CT) and Senator Bob Corker (R-TN). They called for a gas tax increase to provide additional revenue for the highway trust fund.

Their bipartisan proposal involves a 12 cent per gallon tax increase over two years. After two years, the gas tax would be indexed for inflation. They suggest that the increased gas tax could be paired with making permanent some of the tax extenders.

Senate Finance Committee Chair Ron Wyden (D-OR) stated he will discuss the gas tax proposal by Murphy and Corker. He rejected a previously-used strategy to fund infrastructure with a general fund transfer that was paid for by borrowing on the national debt.

Wyden stated, “That to me is just very unappealing. That’s like basically saying the Finance Committee just couldn’t come together and deal with it. I think there is a lot of interest in trying to find a bipartisan approach and to just say ‘well, it couldn’t be done, let’s go borrow some more’ when you owe $17 trillion isn’t appealing.”

Editor’s Note: Under current law, the Highway Trust Fund receives revenue from a federal gas tax of 18.4 cents per gallon and a federal tax on diesel fuel of 24.4 cents per gallon. With state taxes added to the federal amounts, the gas tax ranges from a low of 32.9 cents per gallon in New Jersey to a high of 71.3 cents per gallon in California. The federal gas tax has not changed since 1993 and presently is not adjusted for inflation. The challenge for Congress is that any gas tax is unpopular. However, because Americans are driving more fuel-efficient cars, the total anticipated use of gas and the expected gas tax revenue is below projections. The gas tax and Highway Trust Fund issue is likely to be deferred until the November lame-duck session.

Published June 20, 2014
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