A hike in the federal gas tax?

  • 30 October 2017
  • NormanL
A hike in the federal gas tax?

Away from the world of criminal intrigue, there's still a tax fight going on in Congress, and it appears as though some folks who are supposedly on the GOP's side are intent on losing. The latest attempt comes in the form of a proposal to hike the federal portion of the gas tax:

Gary Cohn, the chief economic adviser to President Donald Trump, reportedly told lawmakers Wednesday that they will get a chance to vote for a gas hike early next year that would be used to pay for infrastructure improvements.

Politico Playbook, citing two unnamed House lawmakers at the meeting, reported Cohn's statement about the possible vote. The Hill reported that Cohn “seemed receptive to the idea.”

Fuel taxes have been unchanged since 1993 and created financial challenges for preserving the Highway Trust Fund.

The federal government currently finances its trust fund with an 18.4-cents-per-gallon tax on gasoline and a 24.4-cents-per-gallon tax on diesel fuel, neither of which are adjusted for inflation so the revenue raised has effectively fallen over time.

State-level Republican lawmakers have generally opposed raising fuel taxes.

Cohn, a former president at Goldman Sachs, is among the White House officials who’ve been working on Trump’s infrastructure plan. Another has been DJ Gribbin, former head of government relations at Macquarie Capital. Cohn selected Gribbin to join him on the National Economic Council in February as special assistant to the president for infrastructure policy, Fox Business reported.

The White House intends to back a 7-cent gas tax increase to pay for items like highways, bridges and other public works, the Hill reported.

Considering that the gas tax is regressive -- hitting those with the least ability to pay a higher tax the hardest -- this ought to be a non-starter. But the President has signaled that he's not against the idea, at least not yet.

While there is a strong argument to be made for infrastructure upgrades, there's also no question that the nation's transportation bureaucracy is as bloated and inefficient as it can be. Pouring more money into a system that diverts gasoline taxes to mass transit subsidies, parks, parking lots, and lots and lots of overhead, makes absolutely no sense.

And as transportation expert Randal O'Toole noted the lats time there were rumblings about a gas tax hike, more money won't address the biggest problem facing our transportation system: congestion. O'Toole wrote:

Gas taxes were originally implemented by the states nearly a hundred years ago because they were cheap to collect and congestion wasn’t a serious problem. Today, Americans waste more than $100 billion a year sitting in traffic, and the main reason for congestion is that roads are improperly priced.

Gas taxes are an inefficient user fee because they don’t tell drivers that it costs more to drive on some roads than others or during some parts of the day than others. Oregon and other states are developing electronic fee collection systems that insure that people pay for what they use while protecting privacy.

These systems can eliminate congestion by actually increasing the rush-hour capacity of our roads. Rather than raise gas taxes, Congress should take steps towards implementing a new user fee system that preserves privacy, ends congestion, and eliminates highway subsidies.

There are plenty of arguments against such a solution -- but it's a different way of looking at how to fix the real problem facing our road network.  Another is that we should be building more roads, rather than diverting resources to other areas.

O'Toole is right that simply hiking the gas tax, rather than considering alternatives, only masks our problems. Fixing them requires new thinking -- something it appears Mr. Cohn and the swamp creatures in Congress are incapable of doing.

 

 

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