Higher Gas Tax Unlikely to Gain Support in U.S. Congress

December 5, 2012

As Congress and the Obama administration continue to debate fiscal policy in order to avoid the looming fiscal cliff, infrastructure advocates are hoping to use the situation to gain support for an increase in the federal gasoline tax, says C. Kenneth Orski, editor and publisher of Innovation NewsBriefs.

The 2010 Simpson-Bowles deficit reduction commission proposed raising the gas tax by 15 cents a gallon. However, it has garnered very little support as neither House Speaker John Boehner nor Senate Majority Leader Harry Reid has endorsed it. Moreover, the Obama administration will not support the tax increase considering it hits the middle class the most.

Since the gasoline tax aids in federal funding for transportation infrastructure, a failure to increase it would likely result in new ways to fund infrastructure projects.

  • States are likely to take on more responsibility. Arkansas, for example, had its voters approve a half-cent sales tax to back a $1.3 billion bond issue to fund highway construction for the next 10 years.
  • In addition, states are likely to look for financial participation in public and private financing of projects.
  • This is made possible by an increase of equity in pension funds and private infrastructure investment, as well as expanded lending authority through the Transportation Infrastructure Finance and Innovation Act (TIFIA).
  • TIFIA lending has increased by more than 600 percent from $122 million in FY2012 to $750 million in FY2013.
  • As a result, toll roads may increase as states need a constant source of revenue to repay the loans and any interest it accrues.
  • Already, 19 projects worth more than $27.5 billion have submitted letters of interest for TIFIA loans.

Source: C. Kenneth Orski, "Higher Gas Tax Unlikely to Gain Support in U.S. Congress," Heartlander, November 27, 2012.

 

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