The Right Time to Raise the Motor Fuels Tax

Record low-fuel prices are kindling debate over whether the timing is right to raise the motor fuels tax.

The National Journal reported Jan. 12 that a gas tax hike is looking more palatable to Republicans and that talk in the Senate about a gas tax increase is starting to sound serious. 

"It's a small price to pay for the best highway system in the world," new Senate Finance Committee Chairman Sen. Orrin Hatch, R-Utah, said.

Sen. Susan Collins, R-Maine, also threw her support behind a gas tax increase provided it included a rebate for low-income families.

Since gas prices started falling in June, four out of five of the top U.S. newspapers have called for increasing the motor fuels tax, including the Washington Post, USA Today, and the Los Angeles Times. 

Most recently, the New York Times said the 40 percent drop in gas prices makes now the perfect time for Congress to overcome its fear of offending the nation’s motorists and raise the tax on gasoline and diesel fuel. 

The Times editorial board wrote Jan. 10 that a 15-cent tax increase would add just $3 to the cost of a 20-gallon fill up once it was fully phased in. Americans currently are saving nearly $30 on average for every 20 gallons they buy due to the drop in oil prices.

Sens. Chris Murphy (D-Conn.) and Bob Corker (R-Tenn.) already have proposed raising the federal fuel tax and indexing it to inflation to keep the Highway Trust Fund solvent. The Murphy-Corker proposal would raise the fuel tax 6 cents a year over two years, and index the tax to the Consumer Price Index.

House Transportation and Infrastructure Chairman Bill Shuster (R-Pa.) has made passing a highway bill to pay for the nation’s infrastructure construction and maintenance a top priority in 2015, however he ruled out a motor fuels tax increase as a means of paying for it. 

But the Obama Administration has said it will consider any proposals that Congress approves to pay for transportation, including proposals that increase the gas tax. 

Tom Donohue, U.S. Chamber of Commerce President, summed it up best in his annual speech on the state of American business, “I know the politics are difficult. But isn’t this a pretty good time to try?”