When Congress fails to act, pressure builds to adopt less-effective revenue schemes
Published in CSP Daily News
ALEXANDRIA, Va. — Congress said it effectively averted an infrastructure funding disaster by extending the Highway Trust Fund through May 2015. But without an increase in the motor fuels tax, the Highway Trust Fund remains perched on a precipice, dooming motorists and businesses to suffer severe economic fallout.
Ever since the Interstate Highway System was built, motorists have paid to use the interstate through the motor fuels tax. But the federal fuel tax rate has been shrinking for decades. It has been more than 20 years since Congress last raised the per-gallon gas tax. And since 1993, inflation has eroded the buying power of those 18.4 cents to just 11 cents.
Many lawmakers respond tepidly when asked about raising the fuel tax, citing a weak economy, volatile fuel prices and a voting public adverse to tax increases. But policymakers should understand that the fuel tax has worked for decades and represents the most efficient form of revenue collection and yields the highest percentage of income for road repair.
In a rare display of political courage, senators Chris Murphy (D-Conn.) and Bob Corker (R-Tenn.) introduced legislation to raise the federal fuel tax and index it to inflation to keep the Highway Trust Fund solvent. The Murphy-Corker proposal would raise the fuel tax six cents a year over two years, and index the tax to the Consumer Price Index (CPI).
When lawmakers tackle a long-term highway bill in 2015, they shouldn’t shy away from voting for the viable funding solution that is already in play.
Americans understand that better roads benefit everyone. More than half of Americans would be willing to pay more at the pump if a federal gas tax increase led to better roads, according to a recent AAA survey.
Consumers get more in the form of highway improvements when revenues are collected in the form of gas taxes because they carry lower capital and overhead expenditures to administer.
At 18.4 cents a gallon, the average American family spends $250 per year to support highway infrastructure through the motor fuels taxes paid each time they fill up their cars at the pump. On a per-mile basis, the fuel tax costs drivers a measly 1.6 cents per mile. Administering the federal motor fuel tax costs less than a penny per dollar.
When Congress fails to act on long-term transportation financing, the pressure builds for states to adopt less-effective and less-economical revenue schemes.
Chief among them is tolling. Tolling of existing interstates currently is prohibited under federal law except under a federal pilot program; however, many transportation stakeholders would like to see tolling expanded.
Pro-tolling advocates argue that allowing states to place tolls on existing highways is vital to American mobility and economic growth. But the opposite is true. Tolls represent a much bigger tax on businesses and motorists.
Tolls put businesses at a competitive disadvantage by increasing costs for consumer goods like groceries while also forcing them to increase wages for employees who would be forced to pay the toll to come to work.
Furthermore, tolls cost 20 to 30 cents of every dollar to collect and administer meanwhile drivers pay exorbitant sums per mile to drive the nation’s toll roads. Tolls also increase congestion and accidents as drivers divert onto secondary roads, creating new costs for local governments.
In patching the Highway Trust Fund until mid-2015, Congress has given itself nine long months to do the heavy-lifting on a long-term highway transportation bill. During that time, NATSO will continue to advocate for an increase in the motor fuels tax.
Raising the fuel tax is long overdue, and it’s the right solution for both motorists and businesses.