Another Day, Another Revelation That a Gas Tax Hike Is Necessary

Add another vote in favor of increasing the gas tax to pay for infrastructure investment. A few weeks ago, a couple of senators proposed raising it 25 cents. Then the deficit commission came out in favor of a 15-cent hike. And now, three left-leaning think tanks – Demos, the Economic Policy Institute, and The Century Foundation – are calling for a bump in the fuel tax too.

Here comes yet another push for a higher gas tax (only to be met by yet another pushback by anti-tax policymakers.) Photo: ##http://usa.streetsblog.org/2010/03/31/could-gas-tax-bonds-pay-for-the-next-federal-transportation-bill/##Pop and Politics##
Another push for a higher gas tax will be met by yet another pushback by anti-tax policymakers. Photo: ##http://usa.streetsblog.org/2010/03/31/could-gas-tax-bonds-pay-for-the-next-federal-transportation-bill/##Pop and Politics##

The three groups have come together in a coalition they’re calling Our Fiscal Security to release a new report, Investing in America’s Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility. In it, they throw their support behind a gas tax proposal made last year by the Congressional Budget Office [PDF].

Here’s what Demos, et al. have to say about it:

Increasing taxes on motor fuels would raise significant revenues while decreasing negative social externalities such as pollution and traffic congestion. Revenue from the tax would recapitalize the highway trust fund, thereby providing badly needed funding for transportation infrastructure.

Including state and local taxes, CBO estimates that the average national tax rate per gallon of fuel is 40.3 cents on gasoline and 46.6 cents on diesel. CBO projects that raising federal fuel excise taxes by 25 cents a gallon would generate $305.1 billion over 2010-19… Raising federal fuel excise taxes by 50 cents a gallon, for example, would generate $604.8 billion over 2010-19 (CBO 2009).

Even better, their priority for the revenue is mass transit. They say transit reduces emissions and improves access for the poor.

Investing funds into a modern, interconnected, and affordable public transit system could both reduce our dependency on fuel and increase productivity by reducing the amount of time people sit in traffic. Investment in repairing existing roads and building new and modern public transit systems could also create a significant number of jobs.

Which brings us back to the question of how to fund these critical improvements… which brings us back to the gas tax. How many economists need to get behind this idea before politicians are willing to consider it?

The “Our Fiscal Security” gang is promoting a gas tax increase as just one tiny plank in a wide-ranging, comprehensive platform to achieve “fiscal responsibility without undermining our national strength.” That sounds like something we can all agree on, doesn’t it?

Meanwhile, as the lame duck session takes up where they left off for the Thanksgiving recess, lawmakers are trying to outdo each other at deficit-busting fiscal conservatism. But when it comes to raising revenues, they’re as anti-tax as they’ve ever been.

Are their constituents really ready to let investment in infrastructure wither away? If not, Capitol Hill politicians are going to have to face the music sooner or later and find a new way to pay for essential projects – or else keep on spending our grandkids’ money.

  • gecko

    A great, very accessible book has just come out written by Demos Fellow Jared Duval.

    Next Generation Democracy, What the Open-Source Revolution Means for Power, Politics, and Change.

    Author: Jared Duval

    Pubished: 2010 (just out)

  • Raising the gas tax is long overdue. We already know our infrastructure is in horrible disrepair across the nation and our gas taxes are ridiculously low. We need to raise that tax to reduce dependency on oil (I don’t care whether it’s “foreign” or not, we use too much of it) because people really only change their behavior when it hits them in the pocketbook. We also know that spending on infrastructure is a huge economic catalyst – especially transit, which produces far more jobs per dollar spent than repairing and building roads. Congress just needs the political will to do so.

    Given the GOP’s opposition to any increase in fees or taxes at all, and their general resistance to anything put forward by Democrats (even if it was originally a Republican idea), I doubt we’ll see this happen anytime soon.

  • Though a higher gas tax would be eminently sensible, sensible is not a word I use to describe U.S. politics so I, too, am pessimistic about its passage.

    At the very least, however, we could stop actively subsidizing the oil and gas industries ($15 to $35 billion/year) and the ethanol industry ($7 billion/year in 2006) with taxpayer money. Why should people who don’t own a car or who drive fuel-efficient cars pay to keep gasoline cheap for the gas guzzlers?

  • la rider

    It takes a committee to come to these kinds of conclusions? The bigger the beast the more time and effort it needs to tell the tail which way it intends to go.

  • Fred

    Ultimately the tax should even be higher, like Europe. I’d prefer a phased in approach, add 15 cents a year for 15 years. Presumably a carbon tax would do much the same thing. Agree with taomom and Bryant too.

  • BB

    1997 was the last year fuel taxes paid towards the deficit.
    They have been going broke ever since.

  • Clutch J

    Raising gas taxes is long overdue. However, as electric and hybrid cars penetrate the market, we risk reverse class warfare unless those vehicles (and others) are hit with some sort of VMT fee. Otherwise, wealthier motorists will buy their way out of gas taxes. Or have I taken Leaf of my senses?

  • Chris L

    @Clutch J

    That sounds quite sensible. The poor will be green with envy.

  • Bob Davis

    I mostly get around in my “gas buggy”, but I wouldn’t object to an increase in fuel taxes (driving a Honda Accord rather than a Ford F-150 helps). The trick is to make sure the money raised goes to trains and buses, not to all the other outstretched hands in Washington and Sacramento.

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