Jan. 7, 2015

Pumping for More Gas Taxes

Some view the recent decline in gas prices as an opportunity.

The GOP should not prioritize increasing the gas tax in this session of Congress. But some Republicans view the recent precipitous decline in gas prices as an opportune time to increase the gas tax. After all, the 2016 presidential election will be here in the blink of an eye and the GOP needs examples of leadership to sway the traditionally liberal voters who only show up every four years.

Sen. John Thune (R-SD), the incoming chair of the Senate Commerce, Science and Transportation Committee, says the GOP is considering a proposal to increase the number of cents the federal government siphons from every gallon of gas sold in the U.S. to better fund the Highway Trust Fund.

He’s not alone. Senators Bob Corker (R-TN) and Chris Murphy (D-CT) have advocated for years to raise the tax to get more money flowing into the fund that reimburses states for highway projects and mass transit ventures. The last time the tax was raised was 1993, but since then inflation and costs creep upward while people consume less gas. Congress has bolstered the fund with five injections of billions of dollars from the general fund since 2008 alone.

And now, with the average gallon of American gas costing $2.19, Republicans in Congress think America’s motorists won’t feel a gas tax hike. As Corker said, “Hopefully this is something again over the next several months, especially with energy prices being where they are, that can gain some momentum and show that Congress can go from A to B and can solve a problem with a user fee, which by the way is the most conservative way in the world to generate revenues.”

Corker is right in saying a consumption tax is the most conservative tax policy. But a decent tax policy doesn’t make up for a badly executed government program. Congress has plenty of room to reduce costs and make the Highway Trust Fund more efficient before it hits drivers again at the pump.

As it stands now, the Highway Trust Fund is a bloated spawn of the big-government idealism of the 1950s. The federal government needed a way to fund the stretches of Dwight Eisenhower’s interstates and the fund was born. In the ‘80s, the fund started to provide money for mass transportation projects – something that can easily become pet projects for Washington fat cats.

At the fund’s heart lays a flaw: It warps federalism. The states start the projects, but then the federal government decides motorists in West Virginia, Pennsylvania and other states should help pay for a $3.9 billion bridge that will span the Hudson River to replace the aging Tappan Zee Bridge.

As Reason’s Peter Sunderman writes, “Is Congress really the best organ for making decisions about road projects all around the nation? Some of those decisions, at minimum, are probably better left to the states.”

Instead of raising the gas tax, Congress has options for how it will keep the money rolling toward transportation projects, according to Douglas Holtz-Eakin at Real Clear Policy. Of course, it can continue to do what it always has done: pass another temporary spending measure in a similar way it has been funding the whole government budget for years now. Or it can reform the Highway Trust Fund by finding a new revenue stream, or work with private companies to fix America’s infrastructure. Furthermore, Congress could repeal the Depression-era Davis-Bacon Act, which mandates “prevailing wages” (read: union wages) for public works projects, to allow contractors to better compete.

States already are taking more responsibility for maintaining interstates and bridges that run through their lands. Michael Barone notes, “More than 30 states have passed transportation fiscal measures in the last three years.”

Meanwhile in Washington, the White House has rejected the idea of a gas tax and instead pushed for its tired, old mantra to assuage the nation’s ills: taxes on the wealthy. Responding to a question about the proposed gas tax hike, White House Press Secretary Josh Earnest said, “We have put forward our own specific plan for closing loopholes that only benefit wealthy and well-connected corporations, and using the revenue from closing those loopholes to [invest] in badly needed infrastructure upgrades.”

Furthermore, The New York Times reports other members of Congress find the idea of a gas tax bump unpopular. With a new majority in place, Republicans should not make increasing a tax for a bloated government dole a cornerstone of their next two years in Congress. There are more important fights.

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