Is the Federal Fuel Tax About to be Cut?

It what will amount to an absolutely asinine and incredibly stupid move should it happen, some members of Congress may oppose the renewal of the federal gasoline and diesel fuel tax when it is set to expire this fall. This tax generates revenue which is used to keep our highways from falling apart.

Considering our nation’s infrastructure is crumbling, now seems like the perfect time to pull the plug on the tax, right?

In an article published on CNN Money entitled “Gas Tax May Be Next Tea Party Target,” author Steve Hargreaves discusses what exactly is at stake:

A bill was recently introduced by Senate Republicans that would allow states to opt out of the federal highway program. The highway program uses $32 billion each year collected by the gas tax, plus a handful of smaller fees and some borrowing to distribute some $50 billion a year to the states for road construction, maintenance and mass transit projects.

That represents about 28% of all road and transit spending nationwide, with the rest coming from states or towns in the form of tolls, registration and user fees, state gas taxes or their general funds.

The argument for cutting the federal tax is that highways would be better served by state and local governments, which could raise their fuel taxes, should they choose.

Don’t get me wrong, I’m all for states’ rights and less Federal oversight, but at a time when state and local governments are running massive deficits and having to slash their budgets left and right, is this really the time to put the burden of the nation’s highway system on them?

My fear is that the gas taxes would go up at the state level, only to fund non-highway and transportation projects, leaving us with even worse road than we already have.

Besides, as most of you know, I want the Federal gas tax raised as a means of forcing people to change their driving habits and for the government to use the proceeds to invest in renewable energy development. (Yes, I know that’s a contradiction to my less Federal oversight comment. Deal with it.)

Anyway, tell me your thoughts on this. Good idea? Bad idea? Leave a comment below and, as always, please share this post using the social bookmarking buttons – especially Facebook and Twitter.

Comments

  1. Rootdude says:

    The gas tax tend to unfairly affect the poor more than the wealthy. The wealthy tend to live closer to their employment and drive newer cars with better tuning, whereas the poor generally live on the outskirts of cities and drive used cars that generally 10-20 years old and way past time for a tune-up.
    What would be better than the gas tax would be removing oil subsidies and adding an luxury/efficiency tax at the time of vehicle purchase based upon the gas mileage (Israel does this).. I wouldn’t be surprised if tax revenues available for road construction (or even better bike lane/sidewalk construction) went way up as a result.
    To get even more out of our roads, I would suggest that cities place toll booths at their outskirts and attribute the money gained toward public transportation (local businesses, residents, carpools and semi-cargo-trucks could be shifted towards a central lane bypassing the booths) (This is the model practiced by Amsterdam.)

    Those measures should reduce traffic and build revenue for hi-speed interstates and highways. But, I’d still go a bit further.. I would mandate that all intra-city roads have a max speed limit of 35mph and increase the federal allowed range and speed for neighborhood electric vehicles (NEV) to 35mph and no maximum range.. Then I would push for expanded road shoulders for bike lanes and convert many four lane roads to three lane. Thereby, making it a slight inconvenience to drive a gas car as opposed to a bike or NEV..

    • I definitely appreciate your thinking outside the box on this issue, but I disagree with your thoughts on the tax affecting the poor more than the wealthy. I would argue the wealthy tend to be more suburban, while poor tends to be more urban. Sure, it’s a regressive tax meaning more of a poor person’s income goes towards the tax, but so too are taxes on cigarettes.

      I think you’re headed down the right path with toll booths – the more you use the roads, the more you pay for them.

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