Five Reasons Not to Raise the Gas Tax
By Randal O’Toole
This article appeared in Huffington Post on July 3, 2014.
The federal Highway Trust Fund is running out of money, and some senators have proposed to fix the problem by raising gas taxes. This, however, is the wrong solution because it treats the symptom, and not the underlying reason for the shortfall. Here are five reasons for not increasing gas taxes.
1. The problem is not a shortage of funds but an excess of spending.
For more than 50 years after Congress created the Highway Trust Fund in 1956 it was able to avoid a shortage of funds by a simple measure: it didn’t spend more than was collected in gas taxes. That changed in 2008, when tax revenues declined due to the financial crisis but Congress continued to spend as if the revenues were growing.
Since 2008, Congress has had to replenish the trust fund with $55 billion in general funds. This isn’t, however, a subsidy to highways; in the last decade, Congress has diverted well over $55 billion of gas taxes to non-highway projects.
Increasing the gas tax would simply allow Congress to increase spending on often-frivolous projects that do nothing for highway travelers, with no guarantee that it would keep spending below revenues. Thus, in two or three years we would be likely to see the fund once again run out of money.
2. Our highway infrastructure isn’t crumbling.
Contrary to popular reports, our highways and bridges are in great shape. Despite the fact that Congress has diverted well over a fifth of gas taxes to non-highway projects, the number of bridges considered “structurally deficient” has declined by more than 50 percent since 1990 and the average smoothness of our roads has increased every year.
Recent bridge collapses in Minnesota and Washington weren’t due to inadequate maintenance. One fell due to a construction error that maintenance could not have detected or fixed; the other fell because an oversized truck illegally tried to cross the bridge. Increasing federal gas taxes could not have prevented these or other recent highway problems.
3. Increasing federal gas taxes won’t reduce local road subsidies.
Although state highways pretty much pay for themselves out of user fees such as gas taxes and tolls, city and county roads require billions in subsidies from other taxes. Increasing federal highway taxes won’t end those subsidies. Instead, we need a new way to pay for roads to insure that highway users get what they pay for and pay for what they get.
4. Higher gas taxes don’t address increasing fuel economy.
Cars are getting more fuel-efficient each year and growing numbers of electric cars don’t use gasoline at all. Some people think that owners of more fuel-efficient cars should pay lower tax rates, but they already save by buying less fuel and many received tax breaks when they bought their cars.
The purpose of user fees is to help consumers understand the true cost of what they use and help producers know where to invest in more facilities. Highway user fees should be proportional to how much people use highways, not how much fuel they use. Gas taxes were an adequate user fee when most cars got about the same miles per gallon, but they make less sense today.
5. Raising gas taxes won’t solve our number one highway problem: congestion.
Gas taxes were originally implemented by the states nearly a hundred years ago because they were cheap to collect and congestion wasn’t a serious problem. Today, Americans waste more than $100 billion a year sitting in traffic, and the main reason for congestion is that roads are improperly priced.
Gas taxes are an inefficient user fee because they don’t tell drivers that it costs more to drive on some roads than others or during some parts of the day than others. Oregon and other states are developing electronic fee collection systems that insure that people pay for what they use while protecting privacy.
These systems can eliminate congestion by actually increasing the rush-hour capacity of our roads. Rather than raise gas taxes, Congress should take steps towards implementing a new user fee system that preserves privacy, ends congestion, and eliminates highway subsidies.
