Study suggests novel way to pay for road improvements without raising gas taxes

By Chris White

Lawmakers can cover the expense of infrastructural improvements while also keeping gas taxes at historic lows, according to a report Monday from a D.C.-based consulting firm.

Cutting the tax and indexing it as a percentage of the overall price of gas would boost the Highway Trust Fund while giving Americans some relief at the pump, the report notes. The move might also take it off the table as a hot-button political issue as midterms approach.

“The gas tax is a fixed amount, last raised in 1993. Because the gas tax is fixed, inflation in the cost of infrastructure and improvements in vehicle fuel efficiency have both eroded the real revenues raised by the tax,” Hamilton Place Strategies (HPS) wrote in an analysis, which suggests the fee actually erodes as inflationary forces wreak havoc on the fuel prices.

The current gas tax fully funded the tools required to finance most federal surface transportation projects. But since 2008, the gap between revenues and expenditures has increased so much that lawmakers have had to appropriate nearly $150 billion from general revenue to keep the Highway Trust Fund in the black. HPS’s analysis argues the 1993 tax increase was unnecessary.

“Our analysis shows that if Congress had voted in 1993 to decrease the then-14 cents federal gas tax to 11 cents but also indexed it as a percentage of price, the tax would still be generating more revenue for the Highway Trust Fund than the actual increase enacted at the time,” the report notes.

The analysis comes a few months after President Donald Trump endorsed a gas tax hike to pay for his $200 billion infrastructure plan. He supported a 25 cent per gallon hike in the gas tax in February and said he was “open to other ways” to pay for a major infrastructure build-out.

Many Republican lawmakers and conservative groups have opposed gas tax hike proposals in the past, saying it would punish Americans’ pocketbooks. A 25 cent gas tax hike would increase the current tax from 18.3 cents to 43.3 cents per gallon.

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