Commission Recommends Raising U.S. Gas Tax

Articles — By forcechange on January 4, 2009 10:09 am

A failing economy may accomplish what environmental and geopolitical necessity could not– which is, cause the government to increase the national gas tax.  A congressionally sponsored commission is set to recommend that the national gas tax should be raised by 10 cents per gallon in order to cover the massive shortfall the national Highway Trust Fund is facing. 

The current lack of funds, which are used to reduce congestion, improve roads, and expand transit, is a result of two problems.  First, the high gas prices in the beginning of 2008 and the failing economy in the end of the year, caused drivers to substantially cut-back on their driving habits.  As a result, between October 2007 and September 2008, the Highway Trust Fund took in $3 billion less than it did the prior year.  Second, even when Americans were driving a lot, the revenues raised by the gas tax were insufficient to properly maintain and upgrade our transportation infrastructure.

Robert Atkinson, chairman of the National Surface Transportation Infrastructure Financing Commission which conducted the study explained, “We’ve basically had a 30-year experiment in this country in under-investing in surface transportation infrastructure.”

In order to fix this two-headed problem of decreasing revenue and under-funding of projects, the commission is going to recommend increasing revenues through higher gas taxes and a new commitment by government to maintain and upgrade transportation infrastructure.

In the long-term, however, the commission notes that gas tax revenues will continue to sink as Americans purchase more fuel-efficient cars.  As a result, the commission is going to recommend that we also implement fees that charge drivers for the amount they drive, rather than just the fuel they consume, which would include mechanisms like congestion pricing and tolls.

While charging drivers for the amount of time they spend on the roads makes a lot of sense, it is addressing only the infrastructure half of our problem.  The other half– environmental destruction and dependency on foreign oil, must not be ignored by any change in policy. 

The short-term recommendation to raise the gas tax will help create a disincentive to consume petroleum, but in the long-term we need to institutionalize this policy.  A shift away from gas taxes to congestion pricing in the long-term, while great for addressing our infrastructure problems, could lessen the pressure to reduce consumption of gas itself.  As a result, we think a long-term plan should also include a big and predictable gas tax that gives drivers a disincentive to consume oil and gives companies an incentive to build products that do the same.

Reference: Reuters

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