Higher federal gas taxes? Businesses are pushing the idea

The influential U.S. Chamber of Commerce is renewing its push to convince Congress to raise the federal gasoline tax — but it’s about to run into strong political resistance.

The GOP-friendly Chamber has been on a summer-long blitz around the country, pressuring skeptical Republican and Democratic lawmakers to support a tax increase, and urging state and local businesses to promote the need for more revenue.

But there’s also a major conservative push against a higher tax. Americans for Prosperity has launched a campaign of its own against higher fuel taxes. And as the election year approaches, many members of Congress are skittish about raising taxes.

Lawmakers are struggling to find a way to pay for infrastructure improvements, and the fuel tax is regarded as an important source of revenue.

“We need Congress and the president to move past the current dysfunction and agree on federal legislation to modernize and fix our nation’s infrastructure,” said Ed Mortimer, the Chamber’s vice president of transportation and infrastructure.

Each penny of gasoline tax brings in an estimated $1.8 billion, but that revenue is expected to drop slowly each of the next 10 years as vehicles become more fuel efficient and travel fewer miles, the nonpartisan Congressional Budget Office said.

NCDOT Revenue sources.jpg
State and federal gas taxes provide the bulk of the N.C. Department of Transportation’s $5 billion annual budget. The Highway Use Tax and DMV registrations provide most of the rest. NCDOT

The Chamber says its proposed increase of five cents a gallon for the next five years would cost motorists an average of $9 a month.

Jeff Davis, a senior analyst at the nonpartisan Eno Center for Transportation didn’t think that much is needed. Raising the tax five cents each of the next two years and a penny per year thereafter should be enough, he said.

The higher fuel taxes are the most logical way to stabilize the highway fund, he said. “Nothing comes close to the ease of implementation,” Davis said.

When Congress returns Monday from its summer recess, it will quickly start looking for a way to pay for a five-year, $287 billion plan to improve the nation’s roads and bridges that a key Senate committee approved in July.

Chamber officials led an effort by 180 business and labor groups this summer called “InfrastructureNow” that reached into their large networks of members to build support.

The Chamber, which has been the top lobbying spender in Washington for the past 19 years, has argued that consumers are already paying for damage to their vehicles because of poor infrastructure and fuel wasted on clogged roads.

Many business interests at the state level have rallied behind increasing the fuel tax. Iowa leads the nation in the number of structurally deficient bridges, followed by Pennsylvania, Oklahoma, Illinois, Missouri, North Carolina and California, according to a study by the American Road & Transportation Builders Association earlier this year.

“This is something we would support,” said Jennifer Patterson, executive director for the South Carolina Alliance to Fix Our Roads, of a higher federal fuel tax. Her group is a coalition that includes businesses and trade associations.

Americans for Prosperity countered with its own campaign against the tax increase this summer. The group sent out mailings to constituents of key lawmakers, warning that a gasoline tax increase will cost consumers $277 a year.

“Instead of heaping new taxes on them that make it harder to get to work, school and church, Congress should stop diverting as much as a third of the highway trust fund to non-road spending and remove outdated regulatory burdens that drive up costs,” said Russ Latino, vice president at Americans for Prosperity.

The next step in Congress is finding a way to pay for the infrastructure plan. Sen. Chuck Grassley, an Iowa Republican who chairs the Senate Finance Committee, isn’t specifically pursuing a higher gas tax but is keeping all options on the table.

So is the Trump administration. Transportation Secretary Elaine Chao earlier this year was asked at a Senate hearing about possible tax changes.

“I think it’s an issue we all need to discuss,” she said. Her office did not respond this week to requests for comment.

Trump has been open to an increase in the past, and in July tweeted his enthusiasm for the highway bill.

“Senate is working hard on America’s Transportation Infrastructure Act.Will have BIG IMPACT on our highways and roads all across our Nation. Interest strong from Republicans and Democrats. Do I hear the beautiful word, BIPARTISAN? Get it done, I am with you!” he tweeted.

But any fuel tax increase faces daunting political hurdles. A tax increase would likely become effective just as 2020 congressional and presidential campaigns are intensifying, and perhaps while the economy is slowing.

Senate Majority Leader Mitch McConnell, R-Kentucky, has long opposed a higher gas tax. Sen. John Barrasso, a Wyoming Republican who chairs the Environment and Public Works Committee, is also opposed.

One idea Barrasso is offering for raising revenue would be to have electric cars help pay for the highway program. Currently, those that use no gasoline are not subject to the fuel tax.

“Everyone who drives on our roads should contribute to the maintenance,” Barrasso said.

And many Democrats are troubled that the fuel tax is regressive, meaning the lower one’s income, the higher the percentage of income one pays.

Earlier this year, Senate Democratic Leader Chuck Schumer of New York told Trump that if the administration wants an ambitious infrastructure program, the president would have to back raising taxes on the wealthy and corporations before increasing fuel taxes.

Last week, Sen. Ron Wyden, top Finance Committee Democrat, reiterated that view.

“I’ve long said that working families should not have to foot the (highway) bill for infrastructure after multinational corporations and the wealthy were showered with hundreds of billions in tax cuts,” Wyden said.

Republicans have a different political challenge. For decades, the party has fought against tax increases, and they regard their signature political achievement during the Trump’s tenure as the 2017 tax cut.

Supporters of the tax increase argue that the policy was not a major issue last year as Democrats gained control of the House. And seven GOP-run states have increased their gasoline taxes since Trump took office in January 2017.

David Lightman is McClatchy’s chief congressional correspondent. He’s been writing, editing and teaching for 47 years, with stops in Hagerstown, Riverside, Calif., Annapolis, Baltimore and since 1981, Washington.