CHAMBER OF COMMERCE SUGGESTS INCREASE IN GASOLINE TAX

Yesterday, the House Budget Committee held a hearing on the solvency of the Highway Trust Fund (HTF). Testifying before the Committee: Robert Poole, Reason Foundation; Richard Geddes, Cornell University; and Janet Kavinoky with the U.S. Chamber of Commerce.

Revenue into the HFT has been inadequate in recent years partially because vehicles have become more fuel efficient – hence – less taxable gallons. Also, volatile gasoline prices have prompted motorists to drive less and conserve fuel. In 2008, Congress injected eight billion dollars from the Treasury’s general fund and another seven billion dollars in 2009 to keep the Highway Trust Fund afloat. Motor fuel excise taxes have not been increased since 1993 and are not indexed to inflation. Recently, House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) said a long-term funding solution for highway infrastructure should be part of the broader tax reform bill.

Similar to what the National Commission on Fiscal Responsibility and Reform, commonly known as the Simpson-Bowles Commission, Ms. Kavinsoky suggested that motor fuels taxes should rise from the current 18.4 cents-per-gallon (cpg) level to around 30 cpg to keep the HTF solvent past 2015. Currently, the HTF is spending $15 billion more annually than the revenues it receives. Additional HTF options include: tolling, vehicle miles travel (VMT) – a user fee based on miles traveled – and public-private partnerships. Mr. Gedde advocated for VMT as a way to shore up the HTF for future years. Specifically, he said mileage-based user fees should be variable with costs adjusted depending on the time of day someone is driving. Rural lawmakers suggested user fees should be based on which highways motorists use, such as making it cheaper to drive on country roads compared to big city highways.

House and Senate Committees will be holding additional hearings to better define the problems and the solutions.

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