Baucus Opposed To Gas Tax Hike Proposals

by Mike Godfrey, Tax-News.com, Washington

20 August 2007

Senator Max Baucus has gone against the views of many Democrats, by rejecting calls for an increase in the federal gasoline tax to help pay for much-needed investment in America's road bridges.

Baucus, the Senate's chief tax writer, told the Associated Press in an interview that an increase in the 18.3 per gallon gas tax would achieve very little, since there is already a switch underway towards more fuel efficient vehicles, and the cost of highway construction materials is increasing. He also argued that hiking the gas tax would be very unpopular with American voters.

"I don't think an increase in the gasoline tax is needed," Baucus told AP. "Where I am going is there are other ways to replenish the trust fund that are frankly more palatable."

One week after the tragic collapse of the an Interstate highway bridge in Minneapolis, Rep. Jim Oberstar, the Democratic chair of the House Committee on Transportation and Infrastructure, announced proposals for a comprehensive program to repair the nation’s bridges, through a new trust fund supplied by a 5 cent per gallon increase in the federal gas tax.

Republican views on the proposal are mixed, but President Bush has let it be known that he would be opposed to any attempt to increase gas taxes.

Some economists have also argued that now is not the time to increase gasoline taxes. Indeed, the Cato Institute, the free market think-tank, has suggested the abolition of gas taxes because it argues that they are inefficient, and do not achieve what they set out to do, i.e. compensate for the environmental damage caused by exhaust emissions. If any action is to be taken, the Institute believes that tolls, user fees, or direct taxes on emissions would be preferable to the "blunt instrument" of gasoline taxes.

"Environmental damages imposed on third parties are indeed a market failure," Cato Institute senior fellow Jerry Taylor and editor of Regulation magazine Peter Van Doren, stated in a report, continuing: "Gasoline taxes, however, will have little effect on aggregate tailpipe emissions."

"We find no compelling reason for a federal gasoline tax at all and call for its repeal. Fuel taxes are at best matters of local governmental concern and they should only be a fraction of current charges on motorists," they concluded.

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