Calls for a federal gas tax hike are rising in the wake of historically low gas prices and a May 2015 deadline to fix funding for the Highway Trust Fund. Without reform, the Highway Trust Fund, which relies heavily on the federal gas tax, will become insolvent, forcing the Department of Transportation to cut funding for state infrastructure projects.
One of the few proposals to solve the Highway Trust Fund’s long-term funding problem comes from Sen. Bob Corker, R-Tenn., and Sen. Chris Murphy, D-Conn. During last year’s Highway Trust Fund debate, Corker and Murphy proposed a 12 cents per gallon increase in the gas tax spread out over two years, then linking the tax to inflation. In order to make the tax hike more acceptable for Republicans, the proposal made some temporary tax breaks permanent so that the legislation would technically be revenue-neutral.
The problem? Gas at the time cost $3.63 per gallon, on average, its highest level in almost a year. The idea of a gas tax hike in an election year scared away supporters.
Now, regular gasoline costs only $2.30 per gallon, according to the Energy Information Administration. As a result, GOP leadership is not ruling out the first gas tax increase since 1993.
But such a hike would be inadvisable. Corker and Murphy’s 12 cents per gallon increase would bring the federal gas tax to 30.4 cents per gallon, a 65 percent increase at the federal level. Combined with state gas taxes, drivers would be paying 53.87 cents per gallon in tax, 29 percent higher than the status quo.
Gas prices will not stay this low forever. Americans will eventually feel squeezed at the pump again, but they would have the Republican gas tax hike fresh in their memory. Worse, indexing the tax for inflation means the tax burden will rise year after year without the fervent debate that tax hikes deserve.
The impending insolvency of the Highway Trust Fund gives Republicans an opportunity to reform transportation funding for the long-term. Kicking the can down the road for another 10 months using budgetary gimmicks would be a disservice to voters seeking competent legislators.
Instead, Republicans should use their expanded legislative power to enact substantive, modern reform of infrastructure funding. States should be given more power to use gas tax revenues as they see fit and become more independent from federal restraints. Federal funding should encourage states to experiment with new policies, such as congestion pricing and mileage-based user fees.
To be fair, the Corker and Murphy proposal is probably slightly better than the status quo policy-wise. The government over-subsidizes transportation, and the proposal would reduce the net subsidy by increasing the cost of road usage. It would also reduce the uncertainty of tax extenders, each of which should either be permanent or eliminated. But the political consequences would still remain, unless Republicans can connect the unpopular gas tax hike to an extremely popular tax cut of some kind. Making relatively obscure tax extenders permanent is unlikely to do the trick.
A federal gas tax hike would only increase state dependence on the federal government. It would also hurt the GOP reputation as the party of federalism and lower taxes. Rather than raising the gas tax when it is less hurtful than usual, the GOP should use this opportunity to empower the states to find their own transportation solutions.
