Down to brass tacks with gas tax


I don’t represent RenewLV’s stance on the gas tax, but here’s my take on it and some of the history behind the issue.

The federal gas tax is rapidly becoming a new political third rail, alongside certain social services. With Republicans controlling the House, it’s less likely the tax will be increased — or that the continuous tax break will be “canceled” as some see it — but the gas tax is still one of those pesky pieces of legislation that needs attention. Having not been adjusted since 1993, this per gallon tax has not kept pace with inflation or the changing per capita demand for gasoline as automobiles see higher CAFE standards. Consequently, while the price per gallon may be increasing, the fraction of this that goes to funding road infrastructure has only been decreasing.

There’s a report by Robert Pirog of the Congressional Research Service that helps to shed some light on the history of the tax, as well as what a political nightmare it is. It was first introduced in 1919 in Oregon and within 13 years was in effect in some form in every state, with the tax itself ranging from $.02 to $.07 per gallon (for comparison, $.02 and $.07 in 1932 would be worth $0.32 and $1.12, respectively, in 2010 dollars). It was permanently enacted by the federal government in the 1940s and was periodically adjusted to either pay for highways or for deficit reduction. It was most recently adjusted by Presidents George Bush Sr. and Bill Clintion.

Where we are today, however, the gas tax has not been adjusted for 17 years. Were the tax to have kept pace with inflation, it would have moved from $.184 in 1993 dollars to $.27 in 2010 dollars. Couple this decrease in real revenue with the fact that improved CAFE standards have helped to reduce individual consumption of gasoline, and you have a revenue stream that is slowing to a trickle at a time when infrastructure investment is needed more than ever. In the eyes of some, this continuous depreciation in the gas tax due to inflation is actually a tax break that occurs every year. Since tax breaks without reductions in spending add to the deficit, it’s fairly apparent what the net effect is.

As it currently stands, user fees make up a continuously decreasing portion of highway funding. Since the gas tax by and large goes towards road infrastructure (with incredibly minor portions directed towards public transit), a real decrease in revenues from the tax reduces what the federal government can invest in roadways. This is amazingly important as the focus at all levels of government on automobile use is propped up, in part, by the myth that user fees pay for highway usage. It’s used as a counter-argument against increased investment in public transit, as mass transit, in the eyes of some, can only be funded if it at least breaks even immediately.

With technological momentum behind systems of highways, and most Americans being socialized to use the car over all other modes of transportation, it would take time for a public transit system to reach enough demand to be profitable. Public transit tends to take a long time to build up, so it’s not such a bad idea to start before roadway congestion becomes even worse and public infrastructure decays even further.

There is some momentum currently in place to slowly increase the fuel tax, but not much. On the one hand, there’s Sen. Voinovich(R-Ohio) and Sen. Carper(D-Del)who suggest increasing the tax at a rate of 1 cent a month for 25 months, in order to let the economy slowly adjust to the effects of the tax. The tax increase would see 15 of the 25 cents going towards the Highway fund, and the other 10 going to deficit reduction. Increasing the gas tax is also suggested in the Debt Commission’s proposal to decrease the deficit, though admittedly this might make the adjustment even less likely of passing

Compounding the improbability of an increase in the gas tax is the rise to Chairman of the House Committee on Transportation and Infrastructure — say that five times fast — of heir apparent Rep. John Mica(R-FL). While in the past Mica has shown himself to be a supporter of expanding transit infrastructure, he has been staunchly opposed to increasing the gas tax.

As I see it, ultimate goal of bringing the gas tax in line with contemporary needs and RenewLV’s Sustainable Transportation Initiative have a lot in common: they encourage reduced reliance on solely the automobile, increased usage of mixed use landscapes and transportation, and seek to promote infrastructure systems that are economically and environmentally sustainable.

Tax increases during a recession are barely politically palatable. The gas tax is also a regressive tax increase, due to the nature of its implementation. However, it pays for public road infrastructure while also placing the costs onto the greatest users of roads. By internalizing a portion of the costs of highway usage (the gas tax doesn’t even remotely touch the environmental or health damages accrued from automobile usage), demand for automobile usage and infrastructure would decrease, while increasing public desire for multimodal transit. Reinvesting in our existing infrastructure, establishing new systems of public transit, and shrinking the federal deficit; the gas tax is a difficult measure to support, but it is what’s needed.

Posted on November 12, 2010, in Federal Policy, Public Infrastructure, Transportation. Bookmark the permalink. Leave a comment.

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