Gasoline tax hike might be unpopular but sensible choice
POSTED: Tuesday, January 06, 2009
A congressional commission's recommendation to increase the federal gasoline tax by 50 percent makes economic sense but is full of political danger. President-elect Barack Obama has indicated that he will oppose raising taxes of any kind in the current economic doldrums and Congress is no more enthusiastic, but the idea should not be swept aside so easily.
Hawaii motorists now pay 51 cents a gallon in taxes, including 18.4 cents a gallon in federal taxes that go to pay for highway repairs and construction. The 15-member National Commission on Surface Transportation Infrastructure Financing recommends a 10-cent increase in the federal tax. Another commission earlier last year called for up to a 40-cents-a-gallon increase phased in over five years. (In Europe, motorists commonly pay $3.50 an American gallon in taxes.)
When gas prices soared above $4 a gallon across the country, Americans changed their driving habits. Those new habits seem to have taken hold; in Honolulu, the long lines of cars that suddenly emerged at Costco for bargain prices are still huge, although prices have plummeted. The bad news is that the frugal driving habits have caused federal highway construction funds to plunge.
If federal gas taxes remain the same, the annual gap between revenues and investment needed to improve highway and transit systems will grow from $105 billion in 2007 to $134 billion in 2017.
Meanwhile, Obama is expected to propose Great Depression-like programs to improve America's infrastructure, including highway repairs. Borrowing money from China to pay for such work would be unnecessary if increased gasoline tax revenue were to be used to accomplish the same purpose.
Congressional Democrats who remember the negative election ramifications of the 1994 gas tax increase are understandably equivocal. The answer may be to disguise it as a surcharge and include it in a legislative package featuring the economic stimulus of a payroll tax cut.