Federal gas tax increase of 15 cents is coming…or is it?

Democratic Congressman Earl Blumenauer and Republican Congressman Tom Petri will stand together on the one year anniversary of Blumenauer’s introduction of the UPDATE Act (HR 3636), which would increase the gas tax by fifteen cents over 3 years and tie it to inflation. The current tax of 18.4 cents per gallon has not been increased since 1993. Receipts from the tax have been outpaced by transportation expenses by about $16 billion annually in recent years as construction costs have risen and cars have become more fuel efficient. The current level of federal transportation spending is about $50 billion per year, but the gas tax only brings in about $34 billion annually at its current rate. Transportation advocates have suggested that the current lame-duck session would be the best time for lawmakers to raise the gas tax because it would be more politically viable than it would be during the next Congress. But lawmakers have shown little appetite for tackling the proposed hike before the end of the year. (more)

The first U.S. state to enact a gas tax was Oregon in 1919. The state of Colorado, North Dakota, and New Mexico followed shortly thereafter. By 1929, all existing 48 states had enacted some sort of gas tax. Today, fuel taxes in the United States vary by state. The United States federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. On average, as of January 2013, state and local taxes add 30.4 cents to gasoline and 30.0 cents to diesel for a total US average fuel tax of 48.8 cents per gallon for gas and 54.4 cents per gallon for diesel. The state and local tax figure includes fixed per gallon taxes as well as taxes that are a percentage of the sales price. For state-level fuel taxes, thirteen states levy taxes based on a percentage of the sales price, while Florida levies a tax with the rate tied to the Consumer Price Index. The other thirty six states and the District of Columbia do not tie their tax rates to inflation or gas prices, and only see their gas tax rates change when lawmakers vote to change them. As of December 2011, twenty six states had gone ten years or more without an increase in their gasoline tax rate. (more)

The United States Highway Trust Fund is a transportation fund which receives money from a federal fuel tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel and related excise taxes. It currently has three accounts, the Highway Account which funds road construction, a smaller ‘Mass Transit Account’ which supports mass transit and also a ‘Leaking Underground Storage Tank Trust Fund’. It was established in 1956 to finance the United States Interstate Highway System and certain other roads. The Mass Transit Fund was created in 1982. (more)

American drivers, compared to those in other industrialized nations in Europe, pay relatively low federal, state, and local gasoline and diesel excise taxes. The Federal taxes are used specifically to fund annual highway construction, maintenance, and mass transit.  Over the years, proposals have come forth to raise the federal tax… If, as in the United States, federal gasoline tax revenues are directly tied to financing highway construction and maintenance, they can also create jobs and improve the national infrastructure…Although the federal gasoline tax is collected at the refinery, it is fully passed on to consumers, and is included in the pump price…Gasoline for use on highways is currently taxed by the federal government at 18.4 cents per gallon. Of this 18.4-cents-per-gallon tax, 18.3 cents per gallon is earmarked for the Highway Trust Fund, and 0.1 cents per gallon is allocated to the Leaking Underground Storage Tank (LUST) Trust Fund. The total excise tax on gasoline, at the retail level, is in the range of approximately 40 cents to over 50 cents per gallon, depending on the specific state and local taxes that are added to the federal tax. Federal, as well as most state and local levies, are unit taxes, and as such, do not vary with the price of gasoline… (Congressional Research Service, “The Role of Federal Gasoline Excise Taxes in Public Policy,” more)


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