Let’s Pump the Brakes on a Gas Tax to Pay for Infrastructure Spending

Aging American roads, bridges, and infrastructure are in need of repair nationwide. The Trump Administration has proposed a $200 billion plan to make those much-needed renovations. The big question is how we will pay for it. One idea that shouldn't get a green light is a gas tax.

Earlier this month the Trump Administration unveiled its infrastructure plan which uses $200 billion in federal spending over ten years to stimulate at $1.5 trillion in new infrastructure spending from states, municipalities, and the private sector.

President Trump supports raising the federal tax on gas by 25 cents to pay for this plan. Currently, there is a tax of 18.4 cents per gallon on retail gasoline and 24.4 cents per gallon on diesel. The federal gas tax, which has not been raised in roughly 25 years, is used to pay for road construction and mass transit investments.

A recent Quinnipiac poll finds that less than half of Americans (46 percent) think a gas tax is a good idea and that percentage has fallen over five points from last May. Perhaps it’s because Americans know that while infrastructure is important, another tax is not the best way to fund it. The president's Council on Economic Advisers agrees, saying there are better alternatives to raising the gas tax such as tolls.

Here are three arguments against raising the gas tax:

  1. Takes back some of what tax cuts gave Americans – A gas tax increase undermines benefits from December's tax cuts by taking back hundreds of billions of dollars from poor and middle-class families. According to some estimates, the average household consumed 1,140 gallons of gas in 2016, so the proposed gas tax would add an extra $285 on gasoline each year.

  2. Disproportionately hits low-income families - As Secretary of Transportation Elaine Chao explained: "There are pros and cons... The gas tax has an adverse impact, a very regressive impact, on the most vulnerable in our society."

  3. Is outdated and isn't adjusted for automotive advances - Electric vehicles and highly fuel-efficient cars require less (or no gas), so they don't generate enough revenue to offset the wear and tear they place on roads. The president's Council of Economic Advisors explain:

"One of the things that we point out in the economic report to the president that came out today is that the gas tax's current design isn't really a 21st century design — that the gas tax was set at levels that were needed to fund highways back in the days when fuel economy was really low and we didn't have electric cars," Kevin Hassett, the council's chairman, told CNBC on Wednesday.

"Imagine if everybody drove a Tesla," Hassett said. "Then how is the gas tax going to be maintained to pay for the roads?"

By turning to a gas tax, we're saying that this is the best option without considering alternatives. We must explore other solutions.

The Independent Women's Voice joined a coalition of over 30 organizations to make that case to Congress. We explain:

Rather than seeking to increase prices at the pump in the form of a tax hike, lawmakers should first reform the way existing transportation dollars are spent.  

Too often, highway funds are diverted to non-highway projects, a problem that worsens with each passing year. This non-highway spending shortchanges motorists, and undermines the userpays principle. 

In addition, labor mandates and byzantine planning and analysis requirements can needlessly delay the completion of transportation projects and contribute to increased costs. Modernizing these burdensome planning requirements and sweeping away cost-boosting labor restrictions would stretch existing dollars further.

An infrastructure overhaul is absolutely a top priority. Infrastructure is a building block for our society and economy. It enables trade, connects workers to jobs, provides employment to millions of workers, powers homes and businesses, moves people around, and protects the nation. When infrastructure is absent or dilapidated, we feel the impacts.

The question is not if we should invest in infrastructure, but how do we pay for it? For the sake of workers and families gaining their financial footing and enjoying relief from tax cuts, the how should not be a higher federal gas tax.

 



Go Back