Boxer: Replace gas tax with wholesale oil fees to pay for transportation projects

The chairwoman of the Senate committee that oversees infrastructure projects said on Wednesday that the federal government should replace its 18.4 cents per gallon tax on gasoline purchases with a fee that is paid by oil wholesalers.

Getting rid of the federal gas tax in lieu of a wholesale oil tax increase would help close an approximately $20 billion shortfall in transportation spending Congress is looking to solve, Sen. Barbara Boxer (D-Calif.) said.

"There are many ideas out there, and the one that I'm leaning toward myself, although this is going to be a decision of the [Senate] Finance Committee ... is to do away with the per-gallon fee at the pump and replace it with this sales fee as they've done in Virginia and Maryland," Boxer said during a hearing of the Senate Environment and Public Works Committee.

"It would fund the highway program for six years ... I think, and it would do that by doing away with all the other fees," Boxer continued. "It's a very exciting idea."

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Since the 1930s, Congress has paid for transportation projects by collecting a tax on each gallon of gas that is purchased by drivers. Currently the federal gas tax, which has not been increased since 1993, brings in approximately $35 billion a year.

The most recently approved surface transportation bill that was passed by Congress in 2012 included approximately $54 billion per year for infrastructure projects, which advocates say is barely enough to cover the cost of maintaining the current state of the U.S. transportation system without making any improvements.

Boxer spoke about being "in the trenches" with GOP members of the Senate committee on Wednesday during the passage of the 2012 transportation measure, which was dubbed the Moving Ahead for Progress in the 21st Century (MAP-21) Act.

That measure was paid for with the package of trust fund sweeps and fee increases in addition to the money from the gas tax. The cobbled-together funding package was only enough to cover transportation spending for two years, unlike other road and transit funding packages that have historically lasted five or six years.
  
Boxer said on Wednesday that there was bipartisan agreement that Congress needed to find a new funding source for transportation, which she noted was rare amid a larger debate about possibly shutting down the government over healthcare.

"We're here on an issue that has united us, and that's good thing, given that we probably couldn't pass a Mother's Day resolution around here," Boxer said. "I think it's excellent that we can agree that transportation is something we can rally around and work together on."

The current law that provides transportation funding is scheduled to expire in September 2014.

Boxer said that Congress could avoid having to pay for transportation projects with money from other areas of the federal budget again when that time comes by replacing the taxes that are paid by drivers at the pump with levies that collected when gas stations purchase their supplies.

"I really believe we can get a sustainable funding source for transportation," she said. "I believe this, I've seen some ideas that are quite compelling on how to do this. Simplify things, get one funding source, follow the lead of some of our states that are turning to a percentage highway fee that is paid at the refinery level. This could bring in more than all of the other taxes bring in for transportation." 

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