Forget Raising the Federal Gas Tax, Congress May Let it Lapse
For years, many transportation and fuel efficiency advocates have called for a hike in the federal gas tax that would put fuel prices in the United States on a more even ground with countries like Germany and the UK, where taxes are several times higher than the 18.4 cents tacked onto every gallon of gas sold here. If fuel costs were higher the argument goes, Americans would be more reluctant to buy gas guzzlers, and look more to vehicles that can get them from point A to point B while using as little gas as possible. Indeed, surveys and consumer behavior both strongly indicate that fuel efficiency becomes a higher priority for car buyers the more expensive gas gets.
Earlier this year, the presidents of the AFL-CIO and U.S. Chamber of Commerce—usually natural enemies in Washington—came together to encourage the Senate to raise the national gasoline tax for the first time since 1993. Though participants at the hearing acknowledged the limited political feasibility of such a measure, it was clear that quiet support for new tax hike that would increase revenue to the federal Highway Trust Fund to rebuild road infrastructure, has been building.
In January, General Motors CEO Dan Akerson told The Detroit News he favors raising the tax by as much as $1 per gallon to help encourage consumers to buy more efficient vehicles.
Now, in the aftermath of a national debt ceiling battle that saw anti-tax advocates victorious in their call that no new tax revenue be raised to help balance the federal budget, a new fight over the nearly 80-year-old federal gas tax seems to be on the horizon. Grover Norquist, the influential president of Americans for Tax Reform—who has seen a new wave of Republican lawmakers take up his fight to drastically slash both taxes and federal spending—told Politico last week he’d like to see the tax expire, and favors leaving the funding of transportation infrastructure to individual states.
Though few elected officials are on the record calling for an outright elimination of the gas tax, the idea of reducing it or temporarily suspending it has been raised several times over the years when gas prices have spiked. And with Congress at a standstill on a range of funding and taxation issues, rumors have been circulating that Republicans may dig their heels in yet again over extending the tax, which expires on September 30.
If the tax is reduced or allowed to lapse, states would be left to increase their own gas taxes and take on a greater role in funding their own infrastructure repairs. But in states like Georgia, where Gov. Nathan Deal has chosen to block a scheduled increase in the state fuel tax in an effort to hold down gas prices, that could prove to be politically difficult in itself.
The fight re-raises an issue that has come up time and time again in battles over the expansion of domestic oil production, Corporate Average Fuel Economy standards, and even labeling schemes for vehicle tires: do small, short-term cost savings outweigh the need to improve the longterm efficiency of American vehicles? Would establishing a gas price floor (with the difference made up by the gas tax) help bring stability to the economy and vehicle market? Those debates may be coming down the road, but for the time being, the question on the minds of many transportation advocates is whether the gas tax will even exist anymore come October.