Truckers Propose a Gasoline Tax Increase to Pay for Infrastructure Plan

Date: Wednesday, February 28, 2018
Source: Wall Street Journal

The country’s biggest trucking group thinks it has a way to convince Republicans to raise the gasoline tax: Don’t call it a tax.

The American Trucking Associations, reviving an argument in Washington that’s older than some roads, is pressing lawmakers and the White House to gradually increase fuel levies in steps by 20 cents a gallon to raise $340 billion over 10 years for infrastructure spending. But the effort may be as futile as trying to start an 18-wheeler with an empty gas tank.

President Donald Trump’s administration wants to spend $200 billion to build and maintain highways, bridges, ports and other infrastructure projects, with a goal of spurring local governments and private interests to supply additional funding. However, Mr. Trump’s plan doesn’t specify where the federal money would come from, and interest groups are jockeying to influence that process.

Trucking companies are pushing for higher fuel taxes because they worry the alternative would be more tolls, which truckers abhor. They face an uphill climb, as the last time the gas tax was raised was 1993, and many Republican legislators are dead set against tax increases of any kind.

That’s one reason trucking industry officials are talking about “fuel user fees” instead of taxes.

“A fuel user fee is completely paid for by users and does not add a penny to the deficit,” ATA President and Chief Executive Officer Chris Spear said. He sought to wrap his argument in Republican Party history by citing former President Ronald Reagan’s decision to sign a five-cent fuel-tax increase in 1982.

The Trump administration has signaled it may be open to the idea. The tax stands now at 18.4 cents a gallon for gasoline and 24.4 cents for diesel.

“We haven’t had an increase in the gas tax in a long time,” Treasury Secretary Steven Mnuchin said Friday when asked about a possible tax increase of 25 cents a gallon. “It’s one of the things that we’re looking at. It’s just one of the issues. We haven’t made any decisions.”

The distinction between a fee and a tax may just sound like money coming from different pockets, but it carries political weight in Washington. Most congressional Republicans adhere to a “taxpayer protection pledge” advanced by Americans for Tax Reform and its leader, Grover Norquist, to oppose all tax increases.

 

But Mr. Norquist said it’s “laughable” to call the gas tax a user fee. “It is deliberately not a user fee, it is not designed to be a user fee,” he said, pointing to use of substantial portions of gasoline tax revenue for such things such as public transit.

The ATA’s idea, similar to a plan advanced by the U.S. Chamber of Commerce, is to add 20 cents to the fuel tax now and then add 5 cents a year over the next four years, raising $340 billion over 10 years. The trucking group wants the increase imposed “at the rack,” which is the wholesale point when fuel is purchased at the refinery.

To truckers, who can pass along some fuel costs to customers, that’s far better than more toll roads.

Tolls are gaining traction as states try to close budget gaps for maintenance and construction of roads. The Federal Highway Administration estimates about 5,880 miles of highways, state roads, bridges and tunnels required tolls as of 2015, the last year full data was available. That was 16% more than a decade earlier.

Connecticut‘s governor is pushing a toll expansion plan he says would raise up to $800 million annually, and Rhode Island recently began installing “toll gantries” to begin collecting road fees only from trucks.

Highway experts say few in Washington will be distracted by the choice of words behind a gasoline tax increase.

“This is not a user fee,” said Jeff Davis, a senior fellow at the Eno Center for Transportation, a nonprofit, nonpartisan Washington-based transportation research group.

He said the fuel tax could be called an excise tax, which is a levy based on the use of a specific item, such as the taxes on cigarettes in many states. That could soften some opposition since the levy would be on consumption, not income, but Mr. Davis said that’s unlikely to go far on Capitol Hill.

“As long as the speaker of the House, the House majority leader, the chairman of House Ways and Means and the chairman of Senate Finance are against it, you’re not going to see it on the floor. And those four are against it,” he said.

Invoking President Reagan might not help much, either. The conservative icon said at a September 1982 news conference there wouldn’t be an increase in the gasoline tax “unless there’s a palace coup and I’m overtaken or overthrown.” He signed the increase two months later, without bothering to distinguish whether it was a tax or fee.

“What we’re proposing,” Mr. Reagan said in a November 1982 national radio address, “is to add the equivalent of 5 cents a gallon to the existing federal highway user fee, the gas tax.”

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