US urged to consider gasoline tax increase in budget deal

WASHINGTON Fri Nov 30, 2012 2:50pm EST

WASHINGTON Nov 30 (Reuters) - The U.S. Congress should consider raising the federal gasoline tax as part of a budget deal to avert the so-called fiscal cliff at the end of the year and to help ensure funding for some $150 billion of highway projects needed over the next decade, transportation and business advocates said on Friday.

"We continue to advocate that as one of many (options to fund highway programs) ... We think there are a whole range of options out there that the government can use to fund the programs and all of those should be on the table," said Pete Ruane, head of the American Road and Transportation Builders Association, during a panel discussion.

The federal government has collected a gasoline tax since 1932. The amount has risen over the years, but has been about 18.4 cents per gallon since 1993. The revenue is used for the Highway Trust Fund, which Congress created in 1956 to pay for highway projects.

Partly because of increases in fuel efficiency, the gasoline tax no longer collects enough money to pay for highway maintenance and new construction seen essential for safety, the smooth flow of commerce and U.S. international competitiveness.

The bipartisan Simpson-Bowles commission in 2010 recommended increasing the federal gasoline tax by 15 cents per gallon to fully fund transportation trust funds so that other federal revenues do not have to pay for highway projects.

But the idea is so politically unpopular that it does not seem to be under serious consideration in the current fiscal cliff discussions, said Jeffrey Shane, a former Transportation Department official, referring to a series of automatic tax increases and spending cuts that will go into effect early in 2013 if a new budget deal is not reached.

"Why is an increase in the gas tax, to some extent, not a no-brainer? It raises revenue and it diminishes the need to go into the general fund for more deficit spending," Shane said.

Representative Bill Shuster, the incoming Republican chairman of the House of Representatives Transportation and Infrastructure Committee, said earlier this week the White House and Congress should look at all options, including raising the federal gasoline tax, in the fiscal cliff talks.

"Is it something difficult? Sure. But I think it's one of those things you've got to look at while we're going through this negotiation," Shuster told reporters

The current shortfall in the Highway Trust Fund is about $7 billion to $10 billion per year and will only get worse over time, requiring Congress to look at various options for filling that gap, Shuster said.

The U.S. Chamber of Commerce supports raising the gasoline tax, but it is still a tough sell politically because many voters do not make the connection between higher prices at the pump and improvements in the transportation system.

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