First Senate Bill Introduced to Raise Gas Tax

Carper, a Democrat, hopes to take advantage of historically low gas prices to hike the federal fuel taxes four cents a year for four years to end reliance on General Funds to fund transportation spending. Increased credits would offset the tax hike.
August 9, 2015, 5am PDT | Irvin Dawid
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"Sen. Tom Carper is introducing legislation that would nearly double the 18.4-cents-per-gallon federal gas tax to help pay for road and transit projects around the nation," writes Keith Laing for The Hill. "The Delaware senator said the failure of Congress to pass a long-term transportation bill this summer showed it is time to raise the gas tax, which has not been increased since 1993."

"Over the past seven years, Congress has passed 13 short-term, stopgap-funding measures, costing our Treasury nearly $73 billion, instead of approving a long-term solution, costing our country jobs, lost productivity, and overall economic growth," state Carper in his August press release.

Carper's bill, the Traffic Relief Act (S. 1994), would also apply to the 24.4 cent diesel taxAfter four years, both gas and diesel taxes would be indexed to inflation.

"At a time when gas prices are some of the lowest we've seen in recent memory, we should be willing to make the hard choice to raise the federal gas tax," adds Carper. To illustrate how falling oil prices mitigate tax increases, AASHTO Journal reports that Washington state gas prices have decreased since gas taxes increased by seven cents-a-gallon on August 1.

In addition, Jim Camden of The Spokesman-Review explains that gas tax hikes do not necessarily increase gas prices, regardless of oil prices.

"One thing to remember is that motorists don’t directly pay the tax on an individual purchase at the pump; it’s not like a sales tax on a pair of shoes. It’s imposed on wholesalers who collect it from distributors and passed on to retailers, who ostensibly factor it into their prices."

"To balance the 16-cent cost of a gas tax hike, I've suggested making permanent certain expiring tax cuts that will directly benefit hard-working Americans," adds Carper.

The legislation would also extend and expand the earned income (EITC) and child (CTC) tax credits. It would make both credits permanent, as well as expand the EITC for childless workers, index the CTC to inflation, and make it easier for working Americans who qualify to claim the EITC.

Politico's Jennifer Scholtes writes that the bill would generate "an estimated $220 billion over a decade." She adds that "Carper has snagged a key supporter to sign onto his new gas tax bill — Senate Minority Whip Dick Durbin."

It’s no secret the Dem leader is in favor of hiking fuel fees to come up with more cash to fund transportation infrastructure investment. But Durbin’s support of Carper’s plan, in particular, is telling of the traction the proposal could gain. 

In June 2014, Sens. Bob Corker (R-Tenn.) and Chris Murphy (D-Conn.) proposed a 12-cent gas and diesel tax increase over two years. However, the plan has yet to be introduced as legislation. Likewise, Sen. Barbara Boxer (D-Calif.) has suggested a wholesale oil tax.

Several House bills have been introduced to hike and/or index the gas tax, the most recent being the 10-cents-per-gallon "Highway Trust Fund Certainty Act" by Rep. Tom Rice (R-S.C.).

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Published on Thursday, August 6, 2015 in The Hill
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