House bill seeks to increase [federal] gas tax by 15 cents per gallon

[cpzilliacus]

Washington Post: House bill seeks to increase gas tax by 15 cents per gallon

With Congress facing a major shortfall in transportation funding next year, a House bill introduced Wednesday would raise the federal gasoline tax by 15 cents per gallon to close the gap.

Rep. Earl Blumenauer (D-Ore.) announced the proposal at a news conference, flanked by an array of labor, construction and business leaders. It would raise the federal tax on gas to 33.4 cents per gallon and on diesel to 42.8 cents.

"Every credible independent report indicates that we are not meeting the demands of our stressed and decaying infrastructure system – roads, bridges and transit,"  Blumenauer said.

The tax has not been increased since 1993, and the Highway Trust Fund, into which the revenue flows, has suffered because the tax has not kept pace with inflation. Plus, improvements in vehicle fuel economy have reduced consumption.

[mgk920]

Either set the tax rate as a percentage-of-the-price or put roads and other transport on the general fund.

Mike

[cpzilliacus]

Either set the tax rate as a percentage-of-the-price or put roads and other transport on the general fund.

Percent of the price is fine.  Putting highways in the general fund - not so fine, because politicians in Washington will "borrow" highway user revenues for all sorts of things that have nothing to do with highways.

[vdeane]

Either set the tax rate as a percentage-of-the-price or put roads and other transport on the general fund.

Percent of the price is fine.  Putting highways in the general fund - not so fine, because politicians in Washington will "borrow" highway user revenues for all sorts of things that have nothing to do with highways.

Aren't they doing that already?  That seems to be the point of this tax increase.

[getemngo]

I am an environmentalist and a dirty fucking hippie, and yes, tying the gas tax to inflation would be good, and making it a percent of the price would probably be better... in theory.

But I have a problem with funding roads primarily through the gas tax - gasoline consumption is decreasing. There's two reasons for this. First, people are driving less. The total number of miles driven by all cars in the US peaked in 2004 and has been steadily decreasing since. Second, EPA fuel economy requirements get stricter every year, so we're using less fuel for every mile we drive.

You can't encourage people to use less of a resource, one that they're already starting to use less, and expect any revenue tied to it to keep up with our infrastructure's demands. The tax would have to rise exponentially.

[J N Winkler]

Aren't they doing that already?  That seems to be the point of this tax increase.

At the state level, in some states, yes--not at the federal level.  The only major diversion of the federal fuel tax is the Mass Transit Account, which gets a fairly small percentage and has been around for over 30 years.

I don't think this measure has a chance since it (1) raises taxes, and (2) is sponsored by an Oregon Democrat in a chamber of Congress controlled by the Republicans.

[hbelkins]

A 15-cent increase is, in my opinion, outrageous and is something I'd protest vehemently.

I would not be opposed, however, to a reasonable increase of up to 5 cents a gallon.

[KEVIN_224]

And I'm already living in a state with one of the three or four highest gas taxes in the country (Connecticut). When will this nonsense stop?

[oscar]

I'm not dead-set against a gas tax increase, but why does it have to be a Federal rather than state tax (or other revenue) increase?  A gas tax increase would ultimately be spent largely by state DOTs either way, but a state-level increase would cut out the Federal middleman.  And there are no obvious and compelling Federal spending priorities in this area not largely shared by the states, especially with the Interstate system more or less complete, that can't be funded at levels consistent with existing Federal gas tax revenues. 

ISTM that a Federal rather than state tax increase would disproportionately benefit politically powerful states or districts (some of which have porkmeisters yearning to loosen limits on earmarks), which perhaps is the point of this exercise.  It would also provide a one-size-fits-all revenue source, versus the flexibility and experimentation being done at the state level on alternatives to the gas tax.

[J N Winkler]

Fifteen cents is actually too low--there is a consensus (ratified by, among others, a USDOT blue-ribbon panel on transportation funding that reported late in the Bush administration) that the fuel tax actually needs to be tripled.  If this were done, the amount of increase would be around thirty-nine cents a gallon.

The shrinking in tax revenues that has occurred as a result of less mileage and better fuel economy is actually much less, on a percentage basis, than the proposed fifteen-cent increase, let alone tripling the fuel tax.

Although states do collect their own fuel taxes, there is still a substantial federal interest in freight debottlenecking and replacing worn-out infrastructure, which the federal government co-finances with the states through the NH, IM, and STP funding categories.  I'd even argue that an increased federal fuel tax would actually encourage the states to stop diverting their own state fuel tax revenues to non-highway purposes by putting them in the position of having to supply their funding match or forgo the federal funding altogether.

[hbelkins]

Fifteen cents is actually too low--there is a consensus (ratified by, among others, a USDOT blue-ribbon panel on transportation funding that reported late in the Bush administration) that the fuel tax actually needs to be tripled.  If this were done, the amount of increase would be around thirty-nine cents a gallon.

An increase of that type would be self-defeating. We saw what happened to gasoline consumption at the various times that gas prices approached $4 per gallon (especially during Hurricane Katrina). The $4 price seems to be that magic point at which extreme conservation kicks in. There's already a feeling that gas prices are too high, even at $3 a gallon. Drivers don't care if those high prices are going to the government or to the oil companies. They just know they are paying too much for gas and they think it should be cheaper.

And I don't care about European pricing, and neither should any other American. It's not relevant to the discussion.

[wxfree]

Looking at some near-average numbers, 15,000 miles per year with 20 miles per gallon means you use 750 gallons per year.  15 cents extra means $112.5, $9.38 per month.  If we call the average 25 MPG, that means 600 gallons and an extra $90 per year or $7.5 per month.  I suspect many of our type do more driving than average.

If it gets some people to drive less by combining trips or riding the bus, or maybe inspires some people to stop the jackrabbit/slam brakes cycle everyone seems to love, it could end up saving people money.

I think the price is about right where it is, or 15 cents higher.  It's at a point where it isn't oppressive (to most people) but it makes people think about whether their driving is worth the cost.  Most people could do something differently - driving less, slowing down a bit, using smoother acceleration/deceleration curves - to save the equivalent of 15 cents per gallon.

[xcellntbuy]

Either set the tax rate as a percentage-of-the-price or put roads and other transport on the general fund.

Percent of the price is fine.  Putting highways in the general fund - not so fine, because politicians in Washington will "borrow" highway user revenues for all sorts of things that have nothing to do with highways.

Exactly.  Congress has already proven it's track record with the Social Security and Medicare funds.

[Mr_Northside]

Either set the tax rate as a percentage-of-the-price or put roads and other transport on the general fund.

Mike

I'll have to disagree with this.  I'd vastly prefer a fixed-per-gallon tax.  That number, and how it comes about (and potential adjustments for inflation) is a matter for discussion, but gas prices have the ability to fluctuate and spike a lot. 
Some sort of disaster/event, be it natural or political, that causes price spikes would be compounded by an even higher tax amount on that gallon.

[johndoe]

The $4 price seems to be that magic point at which extreme conservation kicks in.

If I may play devil's advocate... perhaps that's not such a bad thing.

[J N Winkler]

An increase of that type would be self-defeating. We saw what happened to gasoline consumption at the various times that gas prices approached $4 per gallon (especially during Hurricane Katrina).

I don't agree that there is any special elasticity effect at the $4-per-gallon mark.  There has never been any evidence of it in states like California which now have $4-per-gallon gas part of the year, and there are good reasons it shouldn't exist:  VMT has stayed essentially flat even in European countries with gas at the (local equivalent of) $8 per gallon or even higher, very little car travel is genuinely discretionary, etc.

Looking at the FHWA OHPI VMT tables, we see that VMT has stayed essentially flat at around 12,000 miles annually per vehicle (light vehicles class) from the late nineties to 2006 inclusive, and from 2007 onward it has hovered around 10,500 on the same basis--a decrease of approximately 10%.  In contrast, if this proposed increase in the federal fuel tax went through (which it won't), it will increase the marginal tax rate by 82% for gasoline, which is far in excess of any recent percentage change in VMT or fleet fuel consumption.

BTW, if there was indeed a Katrina effect related to high fuel prices per se rather than short-lived fuel shortages as a result of refinery closures in advance of the hurricane, then it is not evident in the 2005 VMT data.

The $4 price seems to be that magic point at which extreme conservation kicks in. There's already a feeling that gas prices are too high, even at $3 a gallon. Drivers don't care if those high prices are going to the government or to the oil companies. They just know they are paying too much for gas and they think it should be cheaper.

Yet they continue driving, and support for any intervention in the commodity markets (which is what you are intellectually committed to if you think that the price of gas does not reflect supply/demand fundamentals and should come down) remains soft at best.

I have already laid out some of the reasons I believe this particular proposal for an increase in the marginal fuel tax is a nonstarter.  There are others:  for example, the increase is not explicitly linked to an expenditure plan that addresses a national need that is defined in concrete terms.  ("Fixes decaying roads and bridges" is not concrete enough:  which roads and bridges, and where?)  However, an increase of whatever amount does make a considerable amount of economic sense.  Even if the marginal tax rates were tripled instead of being increased by a mere fifteen cents per gallon, there would still be many states where prices would stay under $4 per gallon even during the summer driving season, and there would be a greatly enhanced level of funding for infrastructure repair and a modest amount of new capital construction (for freight debottlenecking and the like).

The higher amount of increase (tripling federal fuel tax alone) is within the spread in the per-gallon price of gasoline between the off season and the summer driving season.  Only if you add in tripling of the state-level tax do you start to match the spread in some states and exceed it in others.  It is not really reasonable to claim that changes in marginal fuel tax rates will influence consumption unless those changes are at least as large as the ones that drivers have to accommodate on an ongoing basis, such as the jump in price between spring and summer.

And I don't care about European pricing, and neither should any other American. It's not relevant to the discussion.

I am not sure what you mean by this.  Are you referring to suggestions that the US should import the British concept of a fuel tax escalator in order to reduce fleet fuel consumption?  If so, then it is virtually guaranteed that such proposals will never gain political traction here.  Or are you referring to $8 per gallon gas on that side of the Atlantic as part of an argument that we can tolerate $8 per gallon gas here?  If so, then that argument is relevant.  We can tolerate $8 per gallon gas here if it comes in a series of slow increases that allow us to adjust through fleet replacement, technological changes, etc. without sacrificing too much mobility, as has happened in Europe.  If it came tomorrow in a single step increase in the price, then we would be screwed.  The distinction here is between short-term and long-term elasticities of demand.

[Duke87]

Looking at some near-average numbers, 15,000 miles per year with 20 miles per gallon means you use 750 gallons per year.  15 cents extra means $112.5, $9.38 per month.  If we call the average 25 MPG, that means 600 gallons and an extra $90 per year or $7.5 per month.  I suspect many of our type do more driving than average.

As someone who keeps detailed logs of this stuff: an extra 15 cents per gallon in the price of gas would have cost me $102.00 for the year 2011, $96.74 for the year 2012, and $103.77* for the year 2013 through November 15th.

*for my car specifically, so not including the rental in Arizona/California.

I do quite strongly agree that we need to be investing more in infrastructure, but I do have a slight hesitation to get behind the generation of extra revenue without it being accompanied by a commitment to spend it according to some general outline (lest the money be squandered).

And I still insist that we would have more than enough money to build roads, trains, power lines, etc. without raising taxes if we stopped wasting it on other various damn fool crusades.

[JREwing78]

A 15-cent increase is, in my opinion, outrageous and is something I'd protest vehemently.

Fuel taxes being raised by 15 cents = Moral Outrage!

Fuel prices going up 15 cents because it's Thursday, and Big Oil wants a few more bucks = meh

[vtk]

In Ohio, gas prices regularly jump up 30 cents at a time, gradually coming back down over 5 to 9 days before jumping again.  An extra 15¢/gal would go unnoticed amidst the short-term noise, seasonal variation, and long-term drift.

Edit: except the distributors would probably use the tax increase as an excuse for a 60¢/gal total price increase...

[Jardine]

I know this is just the wacko midwestern slant I have on things,


but


instead of raising any taxes, how about reigning in some of the indefensible redundant, wasteful, redundant, fraudulent, redundant, stupid and redundant federal spending ??

Do we need dozens of federal agencies, bureaus, and admins overseeing ice cream toppings?  Do we need hundreds of job bills?  Do we need millions every year for the federal Uruguayan kelp subsidy ?

Really ?


I guarantee the sun will still rise tomorrow if the national labor relations board takes the next six months off, unpaid.

Really. The sun will still come up tomorrow, all the wailing and gnashing of teeth, all the sackcloth and ashes, the sun will still come up tomorrow.

There is 200 BILLION in that sort of wasteful, redundant, stupid, fraudulent and redundant crapola, EVERY YEAR (!!) that COULD be spent on something useful.  Fix some bridges, shovel some cold mix in a chuckhole, put in some new bulbs in the 4way flashers.


Just takes the realization that it could be done. 

[NE2]

poolitics

[vtk]

There is 200 BILLION in that sort of wasteful, redundant, stupid, fraudulent and redundant crapola, EVERY YEAR (!!) that COULD be spent on something useful.

[citation needed]

Also, I think anything beyond "we should divert revenue from other sources to highway and other infrastructure funding" is beyond the scope of this thread and probably against the forum rule which prohibits political arguing.

[froggie]

Percent of the price is fine.  Putting highways in the general fund - not so fine, because politicians in Washington will "borrow" highway user revenues for all sorts of things that have nothing to do with highways.

Aren't they doing that already?  That seems to be the point of this tax increase.

[/quote]

As Mr Winkler indicated upthread, not at the Federal level.  In point of fact, the Federal Highway Trust Fund has had SEVERAL multi-billion-dollar transfers to it from the General Treasury because gas tax revenue doesn't even come close to what Congress has authorized for FHWA expenditures.

A 15-cent increase is, in my opinion, outrageous and is something I'd protest vehemently.

Mr. Winkler also touched upon this, but if we want to make a dent in transportation infrastructure improvement, we'd have to rais it by a lot more than 15 cents.  If we wanted to wean road infrastructure off of local taxes such as sales and property taxes, we'd have to bump it up on the order of 60-70 cents.

And I still insist that we would have more than enough money to build roads, trains, power lines, etc. without raising taxes if we stopped wasting it on other various damn fool crusades.

Perhaps, *IF* you do direct transfers from the General Treasury.  Granted, there's been precedent for that now over the last 10 years, but it also makes it a recurring sore subject of Federal politics.

[Jardine]

Weird site.

Politics is a no-no but salty language is OK.


Can we cuss congress  ??

[Brandon]

Either set the tax rate as a percentage-of-the-price or put roads and other transport on the general fund.

Mike

I'll have to disagree with this.  I'd vastly prefer a fixed-per-gallon tax.  That number, and how it comes about (and potential adjustments for inflation) is a matter for discussion, but gas prices have the ability to fluctuate and spike a lot. 
Some sort of disaster/event, be it natural or political, that causes price spikes would be compounded by an even higher tax amount on that gallon.

I agree, but for the opposite reason.  If the tax were a percentage instead of a fixed amount, then when prices go down, the amount of tax revenue would be less.  A fixed amount prevents some uncertainty when collecting the federal fuel tax (as well as state taxes).