Cliff Driving

Industry says no to federal gas tax hike idea floated to help offset "fiscal cliff" plunge

WASHINGTON -- A group of oil, gas and related retail organizations--including API, NACS, NATSO PMAA and SIGMA--sent a letter on Tuesday to members of Congress, urging them to think twice before leveling any tax increases on the industry as part of fiscal cliff negotiations, according to U.S. News & World Report.

The letter comes on the heels of news that business advocates and states are pressing lawmakers to raise the 18.4-cents-per-gallon federal gasoline tax as part of a deficit-reduction deal to avoid the "fiscal cliff," a $500 billion set of tax hikes and spending cuts set to kick in on Jan. 2, said the report.

The letter, shared with U.S. News by the API ahead of its delivery to members of Congress, was addressed to Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch MConnell (R-Ky.), House Speaker John Boehner (R-Ohio), and House Minority Leader Nancy Pelosi (D-Calif.), and underscored the contributions the oil and gas industry have made to the struggling U.S. economy in the wake of the recession.

"Throughout the economic downturn, America's oil and natural gas industry has provided one of the few bright spots as the economy struggles toward recovery," they wrote. "Through hundreds of billions of dollars invested to develop vast new oil and natural gas reserves, and to expand our refining capacity, this industry is not only producing the energy a growing economy demands, but also creating tens of thousands of high paying jobs while generating billions in new revenue for the government; therefore, any attempts to target the oil and natural gas industry for punitive tax treatment should be avoided as higher taxes could put the economic growth we've created at risk."

It added, "We fully recognize that a solution to the debt and deficit crisis facing the nation must be found. However, tax and revenue issues are best addressed as part of a comprehensive tax reform effort. … Attempts to repeal or reduce normal business tax provisions for our industry outside of comprehensive tax reform could reduce investment, cost jobs, reduce government revenue and make it even harder to achieve equitable tax reform."

Click here to view the full letter.

"Establishing a sustainable resource base for transportation needs to be part of any grand bargain," Emil Frankel, a former transportation expert in the George W. Bush administration and now director of transportation policy at the Bipartisan Policy Center, told CNNMoney in a separate report. "In the short run, raising the gas tax is the best way to do that."

Raising the gasoline tax was one of the recommendations of the Simpson-Bowles debt reduction plan in 2010. The plan called for a 15-cents-a-gallon hike to the gas tax, a level that would cover the current shortfall in the transportation budget. In a 2010 letter to the commission Senator Tom Carper (D-Del.) and former Sen. George Voinovich (R-Ohio) proposed a 25-cents-per-gallon increase, with the additional 10 cents per gallon going toward debt reduction. The pair estimated it would generate $83 billion over five years to chip away at the debt, and an additional $117 billion for road repairs.

But not everyone is convinced a gas tax hike is the way to go.

The gas tax is politically unpopular, mostly because it is regressive, said the report--it hits the poor more than the rich. It is also regionally biased. Most big bridges and highways are near cities, yet those in rural areas would pay the same in taxes.

"The burden would fall on the great middle class, not on the millionaires and billionaires," Ken Orski, publisher of the infrastructure industry publication Innovation NewsBriefs, told the news outlet. "That's why the White House is staunchly opposed to such an increase, and why there's virtually zero support in Congress."