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Higher gasoline taxes? Think again

Americans pay an average motor-fuel tax around $0.50 per gallon. Of this, $0.184 goes to Washington, D.C., with the balance going to states and localities.

One would think that a 25 percent retail gas tax is stiff enough, particularly considering that six months ago the levy was half as much, percentage-wise. But hoping that motorists would not notice given lower oil prices, even Republicans are considering a major increase in the federal tax. Some want a ten-to-twenty-cent increase; Charles Krauthammer wants a whole dollar. The noted conservative columnist calls for a “revenue neutral” tax decrease elsewhere—as if government could not change its mind (or oil prices not go up again).

{mosads}Taxpayers, especially those who drive, should not be seduced by their rhetoric. To the extent that U.S. roads and bridges need repair, the simple answer is to end our elected officials’ long history of diverting and squandering fuel-tax dollars.

Politicians say state and federal fuel taxes are based on the premise that road users should fund construction and repair. Not so. The first federal gasoline tax, enacted in 1932, was used for deficit reduction during the Great Depression. Subsequent increases have been used to fund wars, subsidize mass-transit, repair leaking underground fuel-storage tanks, and, in 1993, more deficit reduction.

In 1995 and in 1997, Congress re-designated the deficit-reduction portions of the motor-fuel tax revenues, amounting to 6.8 cents per gallon, to the Highway Trust Fund, a “lock box” created in 1956 to pay for roads and bridges. A Congressional Research Service report says of 18.4 cents a gallon excise tax, 15.44 cents (84 percent) is earmarked for highways.

Yet earmarking has not prevented wasteful spending of highway dollar. Billions have been used to fund pork-barrel projects favored by lawmakers for their districts. The Big Dig infrastructure project in Boston cost five-times the initial estimate and took nine years longer than expected to complete. A similar project in Seattle, estimated at $1.4 billion, already has cost $1 billion and is only 11 percent complete.

Federal gas tax money has also been used to create hiking trails and even erect a Packard car museum in Warren, Ohio.

State gas taxes, meanwhile, are being used to service debt and fund projects other than roads and bridges. One-quarter of Texas’ state gas tax revenue is spent on education. Kansas has devoted much of its gas tax money to Medicaid.

The massive diversion has had consequences. According to Federal Highway Administration, more than 20 percent of the major highways are in poor or mediocre condition, and more than 24 percent of bridges are structurally deficient or functionally obsolete. Some bridges are “dangerous,” according to former Transportation Secretary Ray LaHood.

To call attention to the funding problem, the Transportation Department has posted a “ticker” on its webpage showing how quickly the Highway Trust Fund is moving toward bankruptcy.

Indeed, just before leaving Washington for its August break, lawmakers passed a stop-gap measure to fund ongoing road projects through May. It created money for highways by relying on so-called pension smoothing, a controversial maneuver that permits companies to put less money into their pension plans, which in turn creates more profits and forces them to pay more taxes. Josh Barro of The New York Times called it “a gimmick worthy of Rube Goldberg.”

In recent years, political gridlock has prevented Congress from passing long-term funding measures and has allowed the nation’s roads and bridges to deteriorate. But enacting a higher gasoline tax is not the answer.

Taxpayers already pay plenty in fuel excise taxes (and have to fill up their tanks more often due to the ethanol mandate). Ethanol-laced gasoline gets fewer miles to the gallon than straight gasoline.

There is no good reason to penalize motorists at the pump for Washington’s failures. Instead of increasing the federal fuel tax, the new Congress should reject the ethanol mandate, end diversion of motor-fuel levies, and enact multi-year highway funding legislation to meet the nation’s infrastructure needs.

Such fiscal discipline might sound like a tall order for today’s politicians, but it is exactly why this Congress was elected.

Bradley is CEO of the Institute for Energy Research, an educational foundation he founded in 1989. He blogs at the free-market energy website, MasterResource.


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