GOP bill would hike gas tax by 10 cents

A Republican House member is introducing legislation to increase the federal gas tax by 10 cents-per-gallon to help pay for transportation projects across the nation.

The measure, sponsored by Rep. Tom Rice (R-S.C.), would offset the gas tax increase with a $133 income tax credit that would be offered to drivers to minimize the impact of higher prices at the pump.

Rice said in an interview with The Hill that his measure would not cost extra money but would give states “certainty” about the availability of federal transportation funding as a July 31 deadline for the expiration of the current spending bill looms.

{mosads}”We have enough revenue already,” he said. “Our measure moves money from the general fund into the Highway Trust Fund. It would raise the gas tax by about 10 cents-per-gallon, which would cost the average driver about $130 per year. It would be offset by a $133 income tax credit, so it’s revenue-neutral.”

Congress has been grappling since 2005 with a transportation funding shortfall that is estimated to be about $16 billion per year, and it has not passed a transportation bill that lasts longer than two years in that span.

The 18.4 cent-per-gallon federal gas tax has been the main source of transportation funding for decades, but it has not been increased since 1993, and more fuel-efficient cars have sapped its buying power.

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in approximately $34 billion annually.

The non-partisan Congressional Budget Office has estimated it will take about $100 billion, in addition to the gas tax revenue, to pay for a six-year transportation funding bill.

Transportation advocates are pushing for a gas tax increase to pay for a long-term transportation bill, but Republican leaders in Congress have ruled out a tax hike.

Rice said his measure would index the gas tax to inflation after the initial 10-cent increase is put in place to prevent future standoffs about transportation funding in Congress.

“I hope we don’t have to have anymore short-term extensions,” he said. “I think it’s very harmful to our country. Infrastructure is vital to our economy and it’s vital to our competiveness.” 

Rice’s bill would result in drivers paying 28.4 cents per gallon on gas purchases, in addition to state fuel taxes, to help pay for infrastructure improvements.

The Department of Transportation has said its Highway Trust Fund will run out of money at the end of this month if Congress does not come to an agreement on an extension in the next couple of weeks.

Lawmakers have turned to other areas of the federal budget to close the transportation funding gap in recent years, resulting in temporary fixes, such as a two-month patch approved by lawmakers in May that is set to expire on July 31.

A $275 billion bill, known as the DRIVE Act, has been introduced in the Senate, but lawmakers in the upper chamber have not revealed how they would pay for the measure. The House has been largely silent on the transportation funding deadline, beyond GOP leaders such as House Ways and Means Committee Chairman Paul Ryan (R-Wis.) and Majority Whip Kevin McCarthy (R-Calif.) ruling out a gas tax hike. 

If lawmakers cannot come up with a way to pay for a long-term transportation bill by the end of July, they will likely have to settle for another short-term patch.