White House Economic Advisor Floats Possibility of Fuel Tax Increase

The President’s chief economic advisor on Oct. 25 raised the possibility of increasing the federal motor fuels tax next year to help pay for the Administration’s $1 trillion infrastructure plan.

The comments, made by National Economic Council Director Gary Cohn in a meeting with a bipartisan group of lawmakers called the Problem Solvers Caucus, were welcomed by NATSO, which has long supported an increase in the federal motor fuels tax. The federal motor fuels tax continues to be the most sustainable, cost-efficient method for generating revenues for surface transportation infrastructure. Nearly 99 cents of every dollar collected from the motor fuels tax goes into the Highway Trust Fund to pay for infrastructure.

Citing an industry source, the Washington, D.C.,-based newspaper The Hill reported late Oct. 25 that the White House intends to back a 7-cent gas tax increase to pay for roads, bridges and highways. However that has not yet been confirmed by the Trump Administration.

Since his campaign, the President has indicated that his massive infrastructure plan would be paid for largely through private investments, which could lead to such revenue schemes as tolling and rest area commercialization, both of which NATSO strongly opposes. NATSO staunchly supports enhanced investment in surface transportation infrastructure but thinks that direct federal spending rather than private sector capital is necessary to do it effectively.

It has been more 20 years since Congress last raised the per gallon motor fuels tax, which means the federal fuel tax rate has been shrinking for decades. Since 1993, the federal motor fuels taxes have stood at 18.4 cents per gallon for gasoline and 24.4 cents for diesel. Inflation has eroded the buying power of the 18.4 cents gasoline tax to just 11 cents.

President Trump in May said that he would consider increasing the motor fuels tax as a means of boosting infrastructure revenues but stopped short of announcing a full-scale endorsement at that time.

As recently as this week, Department of Transportation Secretary Elaine Chao reaffirmed that the agency still thinks that private financing will play a role in the Administration’s infrastructure plan.

Cohn’s announcement came amid an abundance of infrastructure related news on Oct. 25. That same day, the Senate Environment and Public Works Committee approved Paul Trombino’s nomination to serve as Administrator of the Federal Highway Administration (FHWA).

Congresswoman Elizabeth Etsy (D-Conn.) also launched a bipartisan Congressional Infrastructure Caucus, co-chaired by Representatives Jimmy Duncan (R-Tenn.), Garret Graves (R-La.) and Sean Patrick Maloney (D-NY.)

Trombino is the former head of the Iowa Department of Transportation and has expressed support for tolling and public private partnerships to fund infrastructure. However, Trombino has said those funding mechanisms do not work in all instances.

Trombino also played a key role in Iowa's adoption in 2015 of a 10-cent-per-gallon increase in gasoline and diesel fuel taxes to generate about $200 million annually for state and local road and bridge construction projects.

Photo Credit: Carol Jean Stalun/NATSO