Senators call for 12-cent gas-tax increase to replenish highway fund
As Congress works to approve a short-term infusion of cash to prevent a halt in highway and road construction projects this summer, a pair of senators called Wednesday for raising national fuel taxes by 12 cents a gallon over the next two years as part of a plan to ensure the long-term solvency of the Highway Trust Fund.
Conceding that it might not be an easy political sell, especially in an election year, Republican Sen. Bob Corker of Tennessee and Democrat Chris Murphy of Connecticut called their proposal the most straightforward solution to address shortfalls in what was designed to be a self-sustaining fund for infrastructure projects.
The 18.4-cent-per-gallon tax on gasoline has not been raised for more than two decades, and an increase in vehicle fuel efficiency has led to shrinking revenue for the fund.
The previous two-year transportation bill tapped the Treasury to make up for a projected gap, but the trust fund ran dry faster than anticipated.
The senators’ plan would raise the gas tax 6 cents in 2015 and again in 2016, and then provide for future annual increases at the rate of inflation.
They would seek to couple the increased fuel costs with some form of tax relief, either through permanently extending certain tax breaks that are now renewed annually, or leaving it to congressional tax-writing committees to develop other plans.
“We are sick and tired of Congress talking about fixing our transportation funding shortfall and avoiding specifics simply because the solutions are politically uncomfortable,” Murphy said at a news conference announcing the plan. “Money is not going to fall off trees or sprout out of the ground to fill the funding gap.”
The Republican-controlled House is expected to move forward with a plan to replenish the trust fund through early next year using general funds. It also would end postal delivery on Saturdays, an idea the U.S. Postal Service wants Congress to approve to keep America’s postal service financially stable.
The GOP plan essentially calls for using money that could keep the Postal Service afloat if it continues six-day delivery to instead ensure highway and other road projects are funded into next year.
Corker called the House GOP idea a “gimmick.”
“Only in Washington would you take money from one insolvent enterprise to solve another insolvent enterprise,” he said.
Other lawmakers in both parties have floated alternative proposals that could keep the Highway Trust Fund secure, including a temporary tax holiday for corporate overseas earnings, or new taxes related to offshore oil drilling.
Rep. Dave Camp (R-Mich.), the departing chairman of the Ways and Means Committee, called for dedicating $126.5 billion to the trust fund as part of a major overhaul of the nation’s tax code, enough money to fund highway projects for eight years. The White House has supported a similar idea.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) has said he hopes his committee can agree on a solution this month.
Murphy and Corker said they understand that their plan is unlikely to be approved in the short term, particularly with the entire House and a third of the Senate facing elections this fall.
But they said they hoped Congress can adopt the plan next year when lawmakers are likely to consider other tax reform proposals.
Corker also defended his support for raising a tax – typically anathema for Republicans – in part by arguing that continued short-term patches that require more borrowing are even worse. And he said coupling the plan with other tax relief should satisfy conservatives.
Unless a long-term solution is found, he said, “tt the end of the day after playing chicken, both sides will throw their children under the bus and borrow money to make it happen. That to me is not conservative. That to me is not prudent.”
The Club For Growth, a leading anti-tax group, was unconvinced.
“This is a $164-billion tax increase, plain and simple,” said Chris Chocola, the group’s president. “Rather than perpetuate this failed system, Congress should devolve highway funding to the states and let them fund their own infrastructure needs.”
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