CHICAGO -- Last October, reports surfaced that the White House might support raising the 18.4-cents-per-gallon (CPG) federal excise tax on gasoline as a means to pay for its infrastructure proposals. The tax supports the Highway Trust Fund and has not increased since 1993. With the Trump administration's income-tax reform bill passed, the momentum for an infrastructure program appears to be growing. Case in point: A public tussle has begun over the case for raising the gas tax.
The U.S. Chamber of Commerce, which has long supported increasing the gas tax, recently proposed raising it by 5 CPG per year for the next five years.
“We need to increase the federal fuel user fee, which hasn’t been raised in 25 years,” said Thomas Donohue, president and CEO of the U.S. Chamber of Commerce. “Why? It’s the simplest, fairest and most effective way to raise the money we need for roads, bridges and transit.”
Donohue said that increasing the gas tax 25 CPG would raise $394 billion over the next decade, which would help address a projected $138 billion shortfall in the Federal Highway and Transit Trust Fund, which is supported by the fuel tax. While this would equate to about $9 per month more in fuel taxes for the average motorist, the government is already spending about $40 per month in increased maintenance and operating costs, said Donohue.
“I’ve been pushing this for a long, long time, but now gangs of people are pushing it,” Donohue told The Washington Post.
In response, Freedom Partners, a nonprofit political group connected to the Koch brothers and their political advocacy group Americans for Prosperity, sent a letter to the president arguing against the Chamber’s proposal.
“Increasing the gas tax would effectively undermine recent tax cuts by clawing back hundreds of billions of dollars—roughly 25% of the total benefit from tax reform—from low- and middle-income Americans at a time when they thought they were finally getting some relief,” stated the letter signed by Nathan Nascimento, executive vice president of Freedom Partners Chamber of Commerce, and Brent Gardner, chief government affairs officer of Americans for Prosperity.
Based on the groups' calculations, the average American household would spend an extra $285 per year on gas. While they acknowledged the importance of maintaining infrastructure, the groups argue that it should be done so “in the most efficient and effective manner possible.” They suggested prioritizing roads and bridges, targeting wasteful spending, cutting regulations and providing proper oversight of projects.
A leaked copy of the Trump administration’s infrastructure plan, obtained by The Hill, did not specify funding sources for its proposals, including the gas tax or the Highway Trust Fund. Instead, the plan appears to support expanding public-private partnerships and more “flexibility” for the states to collect tolls on interstates, applying that revenue toward infrastructure.