WASHINGTON -- Despite a steady drumbeat of warnings from federal officials, business leaders and states about the sorry condition of the nation's infrastructure, there was very little momentum and little popular support in 2014 to raise the federal gas tax, which funds its repairs and maintenance. That momentum, if not the popular support, may be changing in 2015 as gas prices nationwide are projected to remain below $3 for the year.
The current federal tax on gasoline has sat at 18.4 cents per gallon (CPG) since 1993, while diesel has remained at 24.4 CPG. Meanwhile, the Highway Trust Fund, which funds repairs to the nation's highways, has a projected shortfall of $1.1 billion for fiscal-year 2014 because its spending is outpacing revenues. To make up for the shortfall, Congress has shifted money from the general fund.
Senators Bob Corker (R-Tenn.) and Chris Murphy (D-Conn.) have been pushing a proposal since June 2014 to increase the federal gas tax by 12 cents per gallon (CPG) over two years to reach 30.4 CPG, and then index it to inflation. They expect the increase to raise an additional $164 billion over the next decade.
"If something like this is going to be done, now is the time to do it," said Corker as gas prices in Tennessee dropped below $2 per gallon, reported The New York Times.
When asked about Corker and Murphy's proposal, one potentially influential congressman did not rule out the idea. Sen. John Thune (R-S.D.)--expected to be named chair of the Senate's Commerce, Science & Transportation Committee--told Fox News Sunday last weekend that the committee would be considering a raise in the federal gas tax.
"I don't think we can take anything off the table at this point," Thune told the hosts concerning the Corker-Murphy proposal. "I think it's important to recognize that we have a problem, an issue that we need a solution for, and we need to look at all the possible ways out there in which we can address the challenge and address the problem."
Sen. Jim Inhofe (R-Okla.), new chair of the Senate Environment Committee, said that a gas tax was "on the table"--along with other potential measures--as his committee works on a transportation bill for 2015, Reuters reported; however, he did not explicitly endorse an increased gas tax, or what he calls a "user fee," because it might struggle to earn enough votes to pass in the Senate. There is also the chance that gas prices would be increasing again when it eventually does pass.
And Sen. Dick Durbin (D-Ill.), substituting this week for Senate minority leader Sen. Harry Reid (D-Nev.), gave his full support for an increase in the federal gas tax. "Now's the time do it. But we ought to do it in a thoughtful way," he said, although he did not elaborate on what that means. He added, however, that he would prefer it be done in a way that would also provide tax relief for low- and middle-income drivers, according to Reuters.
While President Obama has previously nixed the idea of raising the federal gas tax, he is willing to change his position if momentum on it within Congress grows. At a recent meeting with business execs, Obama said he would meet with Republican leaders in Congress to see if gas tax increase proposals "have any legs," noting how politically tricky such votes can be for lawmakers, Reuters reported.
"With WTI [West Texas Intermediate] crude oil dipping below $50 per barrel and retail gasoline prices slipping lower and lower ... it would be easy to enjoy the euphoria of pump prices more than $1 lower than last year if only politicians weren't so determined to take more money out of our pockets," said Gregg Laskoski, senior petroleum analyst with GasBuddy.com, in a blog post.
On the state level, effective January 1, Maryland, Virginia and Pennsylvania are raising their state's respective gasoline taxes. California has increases the state's emissions tax that is being applied directly to the wholesale price of gasoline, "so in effect, it's a hidden gas tax increase of a minimum 10 cents per gallon," said Laskoski.
Maryland gasoline and diesel taxes will go up by 2.9 CPG each, to 30.3 CPG and 31.05 CPG, respectively. Pennsylvania wholesale taxes on gasoline and diesel are set to rise 9.8 CPG and 13.2 CPG, respectively. The new state taxes will be 50.5 CPG, for gasoline and 64.2 CPG on diesel. Virginia's gasoline tax climbs 5.1 CPG, from 11.1 CPG to 16.2 CPG--the first time in 29 years that Virginia has raised that tax.
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