Economy

Infrastructure Bill a Missed Opportunity to Fix the Gas Tax?

August 20, 2021

The infrastructure bill passed by the Senate last week is important not just for what’s in it, but also for what’s not. What’s not is a much needed increase in the fuel tax that feeds the federal Highway Trust Fund, said Jim Burg, president of James Burg Trucking Co., Warren, Mich. Burg is also co-chairman of the American Trucking Associations’ Infrastructure Funding Task Force.

The $1-trillion bill includes $550 billion in new spending, $350 billion of which is earmarked for traditional infrastructure projects such as repairs to roads and bridges. “This is significant, but not the entire amount needed to restore our nation’s roads to the level of efficiency and safety from 10 years ago. It falls short of adjusting the fuel tax to equal the increased cost of construction and the increase of fuel economy every vehicle has gained since 1994,” Burg said.

The federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. The tax rates have not been raised since their inception more than 25 years ago. In the meantime, vehicle fuel economy has improved dramatically, cutting trips to the pump, while inflation has eaten away at the buying power of the funds that have been collected. “Had they built into the formula provisions for inflation and better fuel economy, we would be far ahead of where we are now,” Burg noted.

It seems surprising that the trucking industry’s main trade association would be an advocate for higher fuel taxes on its members. But, as Burg noted, ATA members are paying the tab anyway. Delays, wear and tear on vehicles and accidents due to poorly designed and maintained roadways costs the motoring population about $300 billion a year. That includes $120 billion in lost time and lost fuel, $100 billion in damages to vehicles and $80 billion for injuries. “So we are already paying those numbers,” he said.

ATA’s Building America Forward plan proposes an increase of 5 cents per gallon each year for four years for a total of 20 cents. The association estimates the bump would raise an additional $300 billion over the coming decade

“We are pleased about [the funding proposed in the Senate bill]. What we are not pleased about is that it does not include a long-term solution,” Burg said. “With no change in the gas tax, the Highway Trust Fund will still run a deficit.”

And how do you collect “fuel taxes” from the millions of electric vehicles that will take to the road over the next decade? They should pay their fair share, he added. It may come from increased vehicle registration fees at the state level. Other proposals include a vehicle mileage tax, if a system can be developed to track vehicle miles, or smart meters that tack an EVs electrical usage onto the owner’s utility bill. “New [mileage tracking] technology will be available over the next 10 years. What it will look like, I don’t know,” Burg said.

By Tim Triplett, Tim@SteelMarketUpdate.com