Business Groups Back 25-Cent Gas Tax Increase to Fund Infrastructure

WASHINGTON – The U.S. Chamber of Commerce and other industry groups on Thursday sought to rally support for a broad federal infrastructure package and threw their weight behind a framework that includes a 25-cent fuel tax hike to help pay for it.

Raising the tax promises to be a hard election year sell in Congress, where enthusiasm for increasing it has been limited among Republicans. Lawmakers have not acted to raise the gas tax in about a quarter century and it is not indexed to automatically rise with inflation.

Currently, the federal tax on gasoline is 18.4 cents per gallon, on par with its level in 1993. The tax on diesel is 24.4 cents per gallon.

In addition to the tax increase, Chamber President and CEO Thomas Donohue called for speeding up and simplifying permitting and approval processes for infrastructure projects, beefing up construction job-training programs, and enacting reforms that would prevent immigrants, some of whom are working legally in the building trades, from being forced out of the U.S.

Other proposals the Chamber of Commerce issued Thursday call for updating federal loan programs for roads, rail and waterworks to allow for greater private sector involvement, and creating a competitive grant program for nationally significant projects.

Donohue voiced support for either raising the gas tax by 25 cents all at once, or doing it in 5-cent increments over the course of five years. The Chamber would also like to see the tax indexed to inflation and improvements in vehicle fuel economy. Estimates from the group say the proposed increase could raise $394 billion over 10 years.

"This program, as we outlined it, is probably not going to end up being the final deal," Donohue acknowledged at a press conference held during an infrastructure-themed event at the Chamber's headquarters. "What we want is an immediate, vigorous discussion."

The Trump administration has indicated it will release an infrastructure plan sometime around the end of the month.

But the White House has highlighted infrastructure as a priority area for the president since his term began nearly a year ago and has yet to unveil a detailed proposal.

Based on information that has emerged about the plan so far, the administration is seeking about $200 billion of direct federal investment, which could be combined with state, local and private funds. Whittling down federal permitting and approval processes for projects is another priority the White House has identified.

GOP support on Capitol Hill for a gas tax increase is tepid at best.

For instance, Route Fifty on Wednesday asked Sen. John Barrasso, a Wyoming Republican who chairs the Environment and Public Works Committee, if he'd support a gas tax increase to help pay for the president's infrastructure plan. His reply was unequivocal: "no."

Senate Majority Whip John Cornyn, of Texas, also offered an unambiguous take on the possibility of raising the tax. “I have complete confidence that we will not be raising the gas tax,” he said, The Washington Post reported last week.

And, last fall, Rep. Sam Graves, a Missouri Republican who chairs a House subcommittee that oversees roads and transit declared: “You're not going to see a gas tax increase. It's just not gonna happen." 

In contrast, Trump administration officials, and reportedly the president himself, have entertained the possibility of raising the tax.

Fuel taxes provide the main stream of revenue for the Highway Trust Fund, a primary federal account for funding road and transit projects.

But, over the past decade, spending from the fund has exceeded declining fuel tax revenue, as vehicles have become increasingly fuel efficient and construction costs have ticked upwards. Congress has taken action to make up for the shortfalls by transferring about $140 billion from the Treasury's general fund and other sources.

Adding a layer of complexity to the gas tax debate: electric, hybrid, self-driving and shared vehicles, all of which threaten to further erode fuel tax revenues in the years ahead. Some states, such as Oregon, are experimenting with fees charged for the miles a vehicle travels.

"Whatever initiative that comes forward when this is all said and done, it must include a permanent solution to the Highway Trust Fund," said Pete Ruane, the president and CEO of the American Road and Transportation Builders Association.

"The gas tax," he added, "is the most transparent and effective way."

Ruane, along with representatives from the National Retail Federation, the Association of American Railroads, the American Beverage Association, and the National Stone, Sand and Gravel Association were among the groups Wednesday that backed the Chamber's plan.

Current National League of Cities president, Mark Stodola, who is mayor of Little Rock, Arkansas, was also on hand.

"The cities are doing the majority of funding right now on the infrastructure needs," he noted.

Little Rock, Stodola said, has an estimated $2 billion of street and drainage infrastructure needs. He said the city dedicated part of its sales tax income and other revenues to those areas, raising about $172 million over a decade. The mayor described calls he gets related to deficient infrastructure: "When is my street going to be redone, my home just flooded, or there's water gushing through my backyard."

Stodola said he had not personally had a chance yet to meet with GOP leaders in Congress to discuss infrastructure. But the mayor expects National League of Cities members will raise the topic during meetings on Capitol Hill planned for March and that stumping for a gas tax increase will be one part of those discussions.

"Clearly the gas tax needs to be raised," Stodola said. He also expressed an openness to alternatives like mileage-based fees. "I would be surprised if Congress just puts 25 cents on it right away," the mayor added. "A phase-in is probably something that is palatable. It would be, I think, to the citizens in my state."