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Which Organization Is Asking To Raise Taxes?

Approximately 40 cents of each gallon’s cost goes to pay taxes of one kind or another.

Large Associations Are Fighting For Congress to Make An Interesting Change.

2/5/2015 by Caroline Ailanthus

In the United States, highway construction is paid for from the Highway Trust Fund, which also contributes money towards mass transit and the cleanup of leaking underground fuel tanks. The Fund, in turn, derives most of its money from a federal per gallon tax on both gasoline and diesel fuel.

Unfortunately, that tax has not gone up since 1993, while inflation and other factors have driven costs higher. Rather than moving to increase the tax, Congress has repeatedly attempted to lower or suspend it. The result is a backlog of construction and maintenance projects that put the public at risk and causes severe inefficiency within the trucking industry through traffic congestion—professional drivers spend about 141 million hours per year sitting in traffic jams, the equivalent of idling 51,000 drivers.

The American Trucking Association, AAA, and the Chamber of Commerce have jointly sent a letter to Congress asking that body to increase the tax.

The federal excise tax on gasoline is currently 18.4 cents per gallon. The same tax on diesel fuel is 24.4 cents. States also impose their own excise taxes on fuel, an average of 24.12 cents for gasoline and 24.9 cents for diesel. That means that about 40 cents of each gallon’s cost goes to pay taxes of one kind or another. That is not an inconsiderable tax rate, since it is about a quarter of the current total price of gas and fifth of the price of diesel. 

And yet, so rapidly have fuel costs come down that even if the federal tax were doubled (which is highly unlikely), the total price at the pump would still be dramatically lower than it was just a few months ago. Now may therefore be the best time to raise the tax.

It is obvious that the price of fuel will rise again, and the transportation industry specifically is in the process of improving fuel efficiency in order to reduce greenhouse gas emissions. Both private and professional drivers have good reason to continue to seek more fuel efficiency and use of alternative fuels. These practices will protect the public from the costs of raising taxes. At the same time, a solvent Highway Trust Fund will pay for itself through increased highway safety and decreased traffic congestion.

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