Momentum Builds In Congress For Federal Gasoline Tax Hike

| by Kathryn Schroeder

Discussion has grown in Congress about raising the federal gasoline tax to help pay for improvements to federal highways.

The current federal gasoline tax is 18.4-cents-per-gallon. The tax is included in the price consumers pay at the pump, along with any additional state or other taxes that vary by location.

Senator Orrin Hatch (R-Utah), the new chairman of the Senate Finance Committee that oversees tax measures, told reporters he has an “open mind” about raising the federal gasoline tax.

"I prefer not to increase taxes, but to me that's a user fee. People who use the highways ought to pay for them. And that's a small price to pay to have the best highway system in the world," Hatch said.

Reuters reports, Republican John Thune of South Dakota, the Senate Commerce, Science and Transportation Committee Chair, said that “no highway funding mechanism ideas should be taken off the table.”

Republicans are not the only members of Congress who have voiced their possible support of raising the federal gasoline tax.

Senate Minority Whip Dick Durbin of Illinois, the second-ranking Senate Democrat, reportedly believes now is the time to raise the tax, but with caution so it does not penalize lower-income motorists.

Sen. Jim Inhofe (R-Oklahoma) also views a tax increase as one option available.

"I just think that option is there, it's clearly one of the options," said Sen. Inhofe.

Congress is not the only place support has been made clear for the increase.

“Comments this week from Sens. Inhofe, Hatch and Thune signal a growing recognition that the gas tax is a fair and consistent way to fund our infrastructure needs,” Association of Equipment Manufacturers spokesman Michael O’Brien said.

Americans for Tax Reform are still opposed to increasing the gas tax, even as gas prices have declined substantially in the past few months across the country.

“Before Congress even thinks about asking Americans to pay higher prices at the pump, it should make sure that the $33 billion the federal government collects annually from drivers is spent efficiently,” the group said in a statement that was provided to The Hill.

There was no comment from the Americans for Tax Reform on whether they would consider a tax increase as a violation of its anti-tax pledge, which is signed by nearly every Republican who runs for federal office.

Sen. Inhofe urges those who oppose the tax increase to consider it as a viable option.

"I remind my conservative friends, and people who ask the question about maybe as a part of a package having to increase the user fees, that this is what we are supposed to be doing," Inhofe said.

"The user fee is very, very popular. The evidence of that is a lot of states are doing that on their own because 'well if the federal government won't do it we've got to do something about the roads,'" Inhofe said.

The gas tax increase is not Sen. Thune’s preferred choice to fix the infrastructure issue, and if it is approved he said, “You would have to reduce taxes somewhere else, you’d have to provide some tax relief.” 

President Obama is not in favor of raising the gasoline tax, and wants lawmakers to fund transportation projects another way.  One such method would be the existing corporate tax reform package that has not found traction on Capital Hill.

Many in the House of Representatives are reportedly against raising the federal gasoline tax, but they are aware something must be done.

“I’ve never voted to raise the gas tax,” said House Speaker John Boehner (R-Ohio). “A highway bill is critically important … It’s a priority for this year. How we’ll fund it ... We are going to have to work our way through this.”

Transportation expenses have risen in recent years and the gas tax no longer generates enough to sustain the federal spending on transportation of about $50 billion per year. Annually, the gas tax only generates about $34 billion.

If the federal gasoline tax is raised, it will be the first time since 1993.

Sources: The Hill, Reuters / Photo Source: Wikipedia Commons