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Politicians of both parties are calling for a gas tax holiday to help motorists cope with soaring prices at the pump. But a report released by the Urban Land Institute (ULI) on Tuesday suggests the country might be better off if the tax was actually raised in order to increase investment in a deteriorating transportation system.
Already, the United States is falling behind other countries relative to infrastructure funding, the report found. Insufficient investment could eventually choke the economy, according to ULI. China spends 9 percent of its gross domestic product on infrastructure; the United States only invests 2.4 percent, the report said.
Dale Ann Reiss, global director of real estate at Ernst and Young, which conducted the research with ULI, said relatively low gas taxes are one reason the United States is falling behind. Gas taxes are dedicated to paying for road and other infrastructure improvements.
The tax burden American drivers have now is low compared to that of European motorists. The Netherlands and the United Kingdom pay around $5 in taxes on every gallon of gas, for example, compared to 40 cents per gallon in the United States.
Reiss noted that presidential candidates Sens. John McCain (R-Ariz.) and Hillary Rodham Clinton (D-N.Y.) have called for the tax to be suspended. But she suggested that policy would be the wrong move.
“We all know people don’t want to pay more taxes, road tolls, or higher fares. But how else will we pay for what we need?” she said.
The report notes that more and more vehicles are congesting U.S. roads, but spending has remained relatively constant. Vehicle miles traveled in the United States have increased 95 percent since 1980, while road capacity has increased just 3 percent, the report said.
Last year’s Minneapolis bridge collapse and Hurricane Katrina are the types of tragedies that might be avoided with infrastructure investments.
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