Bloomberg News

Shuster Won’t Rule Out Raising Gasoline Tax for Roads

November 28, 2012

Increasing the U.S. gasoline tax and instituting a levy based on miles driven should be options to pay for highway spending as cars become more fuel efficient, said Representative Bill Shuster, who will be the top House member overseeing federal transportation policy.

“I’m not wedded to any options,” Shuster, a Pennsylvania Republican, told reporters today in Washington. “We need to explore them all.”

Republican leadership chose Shuster today to be the House Transportation and Infrastructure Committee chairman in the next session of Congress, which begins in January.

The surface transportation bill passed by Congress in June kept the U.S. gasoline tax at 18.4 cents a gallon, where it’s been since 1993, after Republican leaders and President Barack Obama ruled out an increase. The bill called for spending $18.8 billion over two years above the amount raised by the gasoline tax, with the rest coming from general revenue.

Shuster said a vehicle-miles tax, raising the gasoline tax, tolling and public-private partnerships should be among options Congress considers to close the gap between the amount it needs for highway and transit spending and the money available.

U.S. Transportation Secretary Ray LaHood, a former Republican House member from Illinois, suggested in 2009 after he assumed his post that a vehicle-miles tax should be an option. Then-White House press secretary Robert Gibbs, refuting LaHood’s suggestion, said such a system “will not be the policy of the Obama administration.”

A transportation appropriations amendment adopted by the Republican-controlled House in June forbid the department from even studying a vehicle-miles tax.

VMT Hurdles

Such a tax system may be a “long-term” solution, Shuster said today, without defining his time frame. The concept has logistical hurdles such as how information about miles driven would be collected and how payment would be made, he said.

Oregon has tested a VMT, and another test is under way at the University of Iowa paid for with U.S. dollars. A VMT, in addition to not declining as fuel economy improves, would give the government a way to tax driving of electric vehicles that don’t have gasoline engines, according to a 2011 Bloomberg Government study.

The gasoline tax was last raised in 1993 as part of a deficit-reduction deal. Because it isn’t indexed for inflation, the amount collected has decreased relative to costs for the highway and transit projects it funds. Congress has bailed out the highway trust fund with general fund money so it can meet its obligations.

The trust fund hasn’t covered expenses since 2009, according to the Bloomberg Government study.

The trust fund collected $36.9 billion in taxes and interest in 2011, while it sent out $44.3 billion in payments, according to the Congressional Budget Office. Of the outlays, $36.7 billion went to highways and $7.6 billion to mass transit.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net;

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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