Advisory Panel Urges US Congress To Consider Fuel Tax Hike

by Mike Godfrey, Tax-News.com, Washington

05 January 2009

The National Surface Transportation Infrastructure Financing Commission, an advisory panel created by the United States Congress, has called for an increase in tax on gasoline and diesel fuel to generate enough revenue to maintain the nation’s highway system.

The panel, which is due to present its report to Congress later this month, is set to recommend that the tax should be increased by 10 cents per gallon on gasoline (currently 18.4 cents), and by between 12 cents and 15 cents per gallon on diesel (currently 24.4 cents). The panel may also call for new legislation that would tie the fuel tax rate to inflation.

However, it is thought unlikely that the panel's proposals, which would prove unpopular with consumers already grappling with decreased spending power, are going to be well received by either Congress or the incoming Obama administration.

The NSTIFC is not the only group to voice its desire for higher fuel taxes. In January 2008, a similar commission, the National Surface Transportation Revenue and Study Commission, recommended increasing the federal motor fuels tax by as much as USD0.50 per gallon. The American Society of Civil Engineers has argued that the tax should be increased by USD0.25 per gallon.

According to figures released by the Transportation Research Board of the National Academies, the shortfall between fuel taxes collected and the cost of improving transport infrastructure was USD105bn in 2007. Within its estimates, based on trends in gasoline consumption and fluctuations in prices, the board anticipates that the shortfall will reach USD134bn per annum by 2017, if no further tax measures are adopted.

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