As lawmakers begin work on a massive infrastructure bill that they hope to pass by this summer, a key question lingers: What’s to become of the gas tax?
The federal gas tax, which through the Highway Trust Fund has paid for highways since 1956 and transit since 1982, has been a key revenue stream for a portion of the nation’s infrastructure but has lost its buying power as cars have become more fuel-efficient. It hasn’t been increased since 1993, so it has not kept up with inflation. And with automakers such as General Motors saying they’ll phase out gas-powered combustion engines altogether within the next 20 years, it faces looming irrelevance.
The problem is there’s no clear, easy replacement.
Lawmakers say they prefer the idea of having a user fee pay for highways, but they’re loath to ask people for the money. Democrats and Republicans alike have suggested replacing the gas tax with a fee based on vehicle miles traveled, but detractors argue that such a system is not yet ready for nationwide implementation.
That leaves general revenue.
The federal government has transferred more than $140 billion from the general fund to pay for highways and transit since 2008, according to the Tax Policy Center. Lawmakers and policy analysts increasingly say such transfers will likely continue.
If approved by Congress, the mammoth investment in infrastructure that President Joe Biden has proposed will probably be paid for largely through general funds, debt or other financing measures.
But that bill, which includes everything from rail to broadband as well as highways, is characterized as a one-time infusion of federal dollars aimed at economic stimulus. If it does pass, Congress will still need a steady stream of funding for maintenance and to give state highway departments a level of certainty for planning.
Some argue lawmakers haven’t made the tough decisions on the gas tax because they haven’t felt sufficiently compelled to.
“Anytime we want money, we get money,” said Beth Osborne, director of Transportation for America, an advocacy organization for multimodal transportation. “We didn’t ask to pay for the relief packages. We just did it, because people wanted it done.”
Support for increase
As recently as 2019, a coalition of groups as broad-ranging as the U.S. Chamber of Commerce, the American Road and Transportation Builders Association and the American Association of State Highway and Transportation Officials were among those clamoring for an increase in the 18.3 cent per gallon federal tax on gasoline and 24.3 cents for diesel and kerosene.
House Transportation and Infrastructure Chairman Peter A. DeFazio, D-Ore., called for a hike in the tax. And advocates pointed to 31 states that have increased their gas tax since 2013 as evidence that even voters in conservative states would tolerate such a hike because of the nation’s obvious infrastructure needs.
But even those advocates have dialed down their zeal in the wake of stiff resistance from the Biden administration.
During his Senate confirmation hearings, Transportation Secretary Pete Buttigieg said he was open to all options, only to have a spokesman later correct that, saying the Biden administration would not be raising the gas tax. Biden has vowed not to increase taxes on anyone making less than $400,000 a year.
