Jun 18, 2014 - 6:00pm

Senators Propose to Tackle Transportation Investment Head-on


Mariah Carey and the gas tax: Better with age?

Do you remember 21 years ago? Cool Runnings debuted in theaters, Mariah Carey was at the top of the charts, and the price of gas was $1.12 per gallon. It was also the last time the federal gas tax was increased. That $0.184 per gallon doesn’t go as far as it used to, and American’s highways are paying the price.  

Because it’s not indexed to inflation, the gas tax’s purchasing power has steadily eroded as road material costs rise. As Forbes noted:

The current federal tax on gas is 18.4 cents per gallon (24.4 cents per gallon for diesel) with states adding in an additional 8 cents to 50.6 cents per gallon depending on where you buy your gas (quick look: Alaska is the least expensive while New York is the most expensive).

Why does that number feel so low, at least compared to the overall cost of gas? We haven’t had an increase in a while. In fact, Congress hasn’t raised the federal gas tax in more than twenty years: the last boost came in 1993.

This erosion in the gas tax along with increased vehicle fuel economy has led to shortfalls in the Highway Trust Fund. The HTF provides more than half of the country’s spending on transportation projects and will begin to run dry in July, likely halting the construction of any new transportation projects without action from Congress. This will create a $50 billion hole in states’ 2015 transportation budgets and a $160 billion hole in state budgets over the next decade if left unaddressed. 

Now, two senators have unveiled the first bipartisan proposal to shore up the HTF by making changes to the federal motor fuels tax. The plan offered by Sens. Chris Murphy, D-Conn., and Bob Corker, R-Tenn., would raise the 18.4-cents-a-gallon federal gas tax and 24.4-cents-a- gallon diesel tax by 12 cents each over the next two years. That boost of 12 cents per gallon would bring federal gas taxes roughly in line with inflation (18.4 cents in today’s money would be 30.19 cents for 2014).

The Chamber's Janet Kavinoky, executive director of Transportation and Infrastructure, welcomed the proposal and called for a "constructive conversation in finding a way to fund the investment necessary for our highways, highway safety, and public transportation. A well-designed, modern infrastructure enables the business activity that leads to economic growth, which is exactly why predictable, sustainable, growing sources of revenue are needed to support the federal Highway Trust Fund."

Critics charge that the American public does not want to see an increase in the gas tax, but a recent survey commissioned by AAA suggests that the public might just be more pragmatic than obstinate.

The survey found that just over two-thirds (68%) of Americans believe that the federal government should be spending more on roads, bridges and mass transit systems. And more than half of those surveyed (52%) were willing to pay more at the pump for improvements. How much? Of those 52%, most would be prepared to pay an additional $10 or more per month for better transportation infrastructure. Currently, U.S. drivers pay about $8 per month in federal gas taxes.

Unlike 1993, we’re no longer paying $2.27 for a gallon of milk or $0.90 for a dozen eggs. Prices go up. The same is should be true with the gas tax. It’s critical that Congress provide the funds needed to adequately invest in our highway and transit systems.

Follow Sheryll Poe on Twitter at @Chamberflack and the U.S. Chamber at @uschamber.

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About the Author

About the Author

Sheryll Poe is a former senior writer at the U.S. Chamber, who covered public policies affecting businesses including the three "T's" - transportation, trade and taxes.