Gas-tax increase proposed in U.S. Senate

From AGC of America

With the balance in the federal Highway Trust Fund quickly being depleted to the point that it is projected to have insufficient revenue to pay states for ongoing construction activities within the next few weeks Senators Chris Murphy (D-Conn) and Bob Corker (R-Tenn) introduced legislation that would raise the 18.4 cents per gallon gas tax and 24.4 cents per gallon diesel tax by 12 cents each and then indexing the taxes to keep pace with inflation. The increase would be phased in over two years raising 6 cents per year. Their plan calls for offsetting the tax increases by permanently extending six federal tax breaks that expired this year. They also said they would be open to other suggestions for offsets. The plan provides enough revenue to fund current MAP-21 spending levels over the next 10 years and replaces all of the buying power the federal gas tax has lost since it was last raised in 1993.

The proposal received immediate reaction from various points of view. The American Automobile Association said “Many Americans are willing to pay a little more if it will lead to improved transportation and a better commute.” AAA President Bob Darbelnet also cited a AAA survey that found 52 percent of those questioned were willing to pay more to fund roads bridges and mass transit.

However two influential conservative groups quickly lined up against the bipartisan plan. Americans for Tax Reform a leading voice opposing all tax increases said it does not endorse the outline joined the Club for Growth which also denounced the proposal.
AGC lined up in support with a statement from CEO Stephen Sandherr which said in part “This proposal provides the kind of long-term funding solutions that virtually every independent bipartisan commission has said are needed to repair and upgrade our aging transportation network. As important by finding the courage to cross aisles and tackle difficult funding questions the Senators are demonstrating the legislative process at its finest.”

The six expired tax breaks identified by the senators as possible offsets for fuel tax increases are a research and development tax credit certain expensing by small businesses the state and local sales tax deduction increasing employer-provided transit benefits to the same level as parking benefits a deduction for spending by teachers on classroom supplies and an increased deduction for land conservation and easement donations.