Increase the federal gasoline tax

Dilapidated water and sewage systems, a teetering electric grid, falling bridges, dangerous roads and tunnels . . . Republicans, Democrats, and President Trump all seem to agree that we need to make major improvements to our national infrastructure. It is falling apart. 

We’ve let things go too long and we must start to make major repairs, which become more necessary and more expensive the longer we wait. The trouble is we’re not prepared to pay for the work that must be done. The president has proposed an extremely modest federal contribution to this effort with the hope that states and localities, together with private businesses, will pay the rest. This is wishful thinking. A realistic shopping list of sorely needed public projects might tally in the trillions of dollars. Where will we find the money to make a start on upgrading our infrastructure?

One way to raise some real money would be by increasing the federal gasoline tax, which was originally instituted in 1932 (at 1 cent a gallon) to pay for our roads and other transportation needs. The last time this was increased was in 1993 when the tax was raised to 18.4 cents a gallon. But in today’s dollars, the tax would have to be 31 cents a gallon to equal the purchasing power of 1993’s money. As a result, the gas tax is able to do less and less of what it was designed to do, specifically maintain the nation’s transportation system. Just increasing the tax to 31 cents per gallon to cover inflation would help but would not compensate for the purchasing power lost over the last 26 years. 

Last January, the U.S. Chamber of Commerce proposed increasing the current gas tax by 25 cents a gallon and President Trump has, at one time or another, backed a similar increase. Were this applied to diesel fuel as well, the tax yield might increase by nearly $44 billion per year. The near-bankrupt federal Highway Trust Fund and its much smaller relative, the Mass Transit Fund, would both be the recipients of additional receipts from an increase in the gas tax.

This seems like a great deal of money, but our infrastructure needs are enormous. Just maintaining current U.S. highways and bridges costs more than 65 billion per year. The Gateway Project for a new tunnel under the Hudson River is currently expected to cost more than $20 billion.

Individual state gasoline taxes in the U.S. vary widely from Missouri (17.4 cents per gallon) to Pennsylvania (58.7 cents per gallon) with an overall average of about 35 cents per gallon. A 50 cent a gallon increase in the federal gas tax would cost the average American car owner, who drives 12,000 miles a year, about $240 in additional annual tax at the pump. This could yield an another $90 billion a year in increased gas tax receipts, still not enough to meet all our transportation infrastructure needs, but a good start.

The combined federal and state gasoline tax in the United States averages 53 cents a gallon. By comparison, the average gasoline tax in the 34 OECD countries is $2.62 a gallon, five times as much! Actually, the costs would be significantly greater still in Europe where most countries also collect an additional 15 percent value added tax (VAT) on purchases of gasoline. French President Emmanuel Macron’s proposed increase in the gasoline tax would have been relatively more painful for French people than a significant increase would be for Americans whose gasoline costs less than half that of gasoline in France. 

A significant increase in the U.S. federal gasoline tax might reduce demand and thereby lessen the harmful effects of climate change. Additionally it might speed up an increase in fuel efficiency standards from the current 24 mpg to 54.5 mpg in 2025 as planned by the Obama administration (currently, the Trump administration is attempting to roll back future fuel efficiency standards to current levels). Another benefit could be more federal spending on public transportation by the Mass Transit Fund, an even more neglected element of our national infrastructure.

The most appropriate amount to raise the tax may be open to debate but should be high enough to subsidize a significant number of major projects. A 50 cent per gallon increase  is bearable and would cause less of a price rise at the pump than has occurred in short periods of time over the last two decades, a gentle enough change to not severely disrupt the overall economy. 

Although tax increases are always unpopular and the fossil fuel industry and their allies in Congress will strenuously resist this proposal, a sharp increase in the gas tax is long overdue.


Lakeville architect and landscape designer Mac Gordon writes frequently on environmental matters.