Wednesday, January 16, 2008

Calls for Raising Federal Gas Tax

A U.S. Transportation panel is calling for raising federal gas taxes to pay for improvements for roads/bridges and to build new ones. Most of the money that state highway agencies (TxDOT in Texas) use to fund roadway projects come from this tax that is collected anytime you fill up your car/truck with gas or diesel. Currently, the tax is 18.3 cents per gallon and the transportation panel is recommending that the tax be increased by 40 cents over 5 years (8 cents per year).

Infrastructure became a “sexy” issue after the tragedy this summer in Minneapolis. Everyone is talking about how we need to improve our bridges and how we need to inspect all of them. You would expect that during the ensuing months every bridge in the US has been inspected and those bridges deemed structurally unsafe closed for repairs. Well you’d be wrong! In fact, TxDOT is facing a credit crunch now and will suspend issuing new contracts starting this February (they have already scaled back other projects).

So do you think people are supporting the gas tax hike? Of course not! A lot of people don’t like the plan – they say it’s the wrong way to solve the congestion problem. Keep in mind the gas tax has not been raised since 1993. Well gas is quite expensive already (nearly $3/gallon) - so do we really need another 40 cents on top of that? To answer that question it would be wise to compare the cost of gas in other countries and see where we stand: approximately $6/gal in Europe, $4.5/gal in Japan, $5/gal in Brazil, and $3.5/gal in Australia. Obviously there are countries where the price is a lot less than that (Venezuela - $0.2/gal).

The idea here is that paying a little more for gas won’t kill us (at least in my opinion) and it is obvious that we need the money to improve our infrastructure. The bottom line is that our infrastructure is old and needs to be repaired the question is how we pay for it. Some people say raise the gas tax and others say let private enterprise handle it (basically tolls). Either way we’ll pay more out of our pockets but tolls cannot be expected to fix the entire US infrastructure (unless we toll everything) so it seems to me that increasing the gas tax might be the answer!

Below is a link to an article in the Austin American Statesman on the topic:


Ross Tomlin said...

A gas tax sounds nice in principle, but the rising price of gas effectively serves as an unofficial tax. So far, the high price we pay now (albeit still lower than other countries, as you point out) doesn't appear to have deterred many drivers from using their own cars instead of taking the bus. Would an extra $0.40/gallon make the difference? I doubt it.

But it would be interesting to see what the tipping point would be. $6/gallon? $10/gallon? If only Austin and other U.S. cities had underground metro systems like DC, NY, SF, and many places abroad ...

Nilou said...

I believe higher taxes does not necessary mean a solution. Higher taxes certainly mean more bureaucracy not necessarily a solution. What we can do is to pay the higher tax and hope MAY Be just MAY BE the problem get fixed. (It usually does not). Once the tax is higher I doubt they decrease it even if the plan does not work.

TammyT said...

I have mixed feelings on this issue. On one side I am all about increasing the cost of oil to reflect it’s nonrenewable status. And if prices go up enough, demand will go down. I’m definitely not an economist, but that seems pretty dependable. We are creatures of habit however, so as prices go up, we are going to find ways to keep doing what we are doing. Dare I hope that will lead to increased energy efficiency? There would have to be more motivation than just this tax, but it’s a start. So let’s say the tax was implemented. Money collected. What is this money really going to be used for?

I understand and totally support the need to improve road systems to prevent loss of human life, and if that is where the money is going, then great. But while the bridge tragedy is being used to push this tax through is there any promise that this will be the first priority? Aren’t we just going to end up with new and wider roads? I feel that spending more money to expand our transportation infrastructure in its current form is not what we should be doing for long term sustainability. And I am sure that a lot of this money will do just that. Building more roads will just increase the demand for gasoline. The powers that be should at least avoid mindlessly (I use this term in an environmental sense) building and expanding roads. Someone needs to put some thought into what will facilitate our conversion, as a country, to a more sustainable transportation system. Improved public transportation, [leading to] walkable cities, improved gas mileage. These are things that we should be spending money on.