Six states are on track to raise diesel fuel taxes. They are: Oklahoma, Indiana, South Carolina, Tennessee, Connecticut, and Maryland. Meanwhile, President Trump has urged Congress to raise the federal gas tax by 25 cents per gallon.
Why are legislators in such a hurry to raise fuel prices?
Tax Revenue Falling Short
In 2016 alone, the federal government raised about $37 billion in gas and related taxes. But despite these big numbers, lawmakers haven’t adjusted fuel tax rates to meet growing needs for highway investment.
The U.S. is facing two problems with its fuel tax program: inflation in construction and maintenance costs, and increased vehicle fuel efficiency.
The 1973 gas crisis inspired automakers to start pushing the bounds of fuel efficiency in their vehicles. And those efforts have paid off. As of 2005, cars that weighed the same as they did in 1975 were 80% more fuel efficient and 60% more powerful.
But these improvements in efficiency come at a cost to U.S. transportation funding. That’s because drivers can now travel longer distances than ever before even as they make fewer purchases at the pump. The result? Analysts are predicting that transportation funding will face a shortage of $86 billion by the year 2030.
According to the U.S. Chamber of Commerce, the 25-cent federal gas tax hike proposed by President Trump will generate $375 billion over the next 10 years.
But groups such as Americans for Tax Reform and Americans for Prosperity have voiced their opposition to the proposed tax hike.
Many voters are opposed to fuel tax increases, too. When California state senator Josh Newman voted to increase state fuel taxes, voters recalled him midway through his four-year term. Newman was one of 81 legislators to vote in April 2017 to increase the state gas tax by 12 cents per gallon.
But if the proposed federal fuel tax hike doesn’t go through, lawmakers will have to scramble to come up with other solutions for funding repairs to the country’s crumbling infrastructure.
“Helping our clients get jobs done since 1998.”