LaHood: Gas Tax Increase in Congressional Hands

As Congress maneuvers to end the political impasse over the next long-term national transportation bill, lawmakers are going to have to debate an increase in the federal gas tax, Transportation Secretary Ray LaHood said today.

Trans_Secretary_Ray_LaHood_Discusses_Cash_Jx_HxR08cPwl.jpgTransportation Secretary Ray LaHood (Photo: Getty Images)

In his remarks at a Fort Worth transportation meeting, first reported by the local Star-Telegram, LaHood stopped far short of reversing the White House’s stated opposition to raising the federal gas tax, which has remained at 18.3 cents per gallon since 1993.

But LaHood appeared to edge the door open to a solution to the nation’s transportation funding crisis — provided that lawmakers swallow their re-election concerns and acknowledge that the current gas tax is no longer raising enough money to run an effective system.

Here’s what LaHood said today (emphasis mine):

To index the federal fuel tax [to inflation], that’s something Congress is going to
have to decide. As we get into the reauthorization bill, the debate
will be how we fund all the things we want to do. You can raise a lot
of money with tolling. Another means of funding can be the
infrastructural bank. You can sell bonds and set aside money for big
projects, multi-billion-dollar projects. Another way is [charging motorists for] vehicle miles traveled. The idea of indexing the
taxes that are collected at the gas pump is something I believe
Congress will debate.
When the gas tax was raised in 1992 or 1993, in
the Clinton administration, there was a big debate whether it should be
indexed. At that time, they thought there’d be a sufficient amount of
money collected. Now we know that isn’t the case. That is one way to
keep up with the decline in driving, and more fuel-efficient cars.

Another fact not mentioned by LaHood: Transportation construction inflation has increased at a rate twice as high [PDF] as the Consumer Price Index, the Labor Department’s traditional method of measuring price hikes for household goods. That means that raising the federal gas tax to appropriately reflect the cost of infrastructure improvements would be even more challenging than many in Washington now admit.

  • We can always argue about the number but the real problem is that it’s a flat cents per gallon instead of a percentage. So when fuel prices go up, demand and sales drop, and tax revenue goes down with it. Since the overall trend for fuel prices will be upward, we need to address this issue.

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