Hawaii eyes gas tax hike

Hawaii eyes gas tax hike
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Hawaii is considering a plan to increase the amount of money drivers in the state will have to pay at the pump to help pay for transportation projects, The Pacific Business News reports

Legislation has been introduced in the Hawaii state Senate to increase the state’s gas tax from 16 cents per gallon to 19 cents, according to the report. 

Drivers in Hawaii are already charged an additional 25.35 cents per gallon in other taxes on their fuel purchases, according to the American Petroleum Institute. 

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Any new increase in the Hawaii fuel levy will be collected on top of an 18.4 cents per gallon federal gas tax that is charged to all drivers in the nation to fill the federal government’s transportation funding coffers. 

The API says the gas tax increase will bring the total amount of money that drivers in Hawaii are charged at the pump to nearly 64 cents per gallon. 

Hawaii is the latest state to consider increasing its own gas taxes in recent years as Congress has resisted a federal hike. Six states implemented such hikes on July 1 of last year. 

Transportation advocates had pushed lawmakers to increase the federal gas tax during a debate about a multiyear highway funding bill last year, but lawmakers opted instead to turn to other areas of the federal budget to pay for a five-year, $305 billion highway bill

Supporters of increasing the gas tax pointing to the willingness of states like Hawaii to raise their own fuel levies as evidence that a national hike would be politically palatable this year.

Conservative groups in Washington have made clear that they would consider a federal increase to be a tax hike, however, and Republican lawmakers ruled it out even as they were searching for ways to pay for a new highway bill.

The national gas tax has been the traditional source of transportation funding since its inception in the 1930s. The tax has not been increased since 1993, however, and improved fuel efficiency has sapped its purchasing power. 

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in approximately $34 billion annually at its current rate. 

Lawmakers turned to other areas of the federal budget to close the $16 billion per year gap last year, but transportation advocates have said the federal gas tax will have to eventually be increased or replaced with a more sustainable funding source to keep pace with rising costs for infrastructure projects. 

The Congressional Budget Office has projected that it will take about $100 billion, in addition to the annual gas tax receipts, to pay for a six-year transportation funding bill. 

Lawmakers relied on a package of approximately $70 billion of offsets from other areas of the federal budget to help pay for the recently completely highway bill, which lasts until 2021.