Democrats seek to jack up the federal gasoline tax
It’s become a choreographed ritual. Every few years, when gasoline prices begin to climb, outraged members of Congress summon oil executives for a very public auto-da-fe. Perhaps next time they feel the need to engage in this ceremonial flogging, the politicians should be on the other side of the table.
Even as U.S. jobless numbers show encouraging signs with the ongoing reopening of the economy, budget-busting Democrats still aren’t content with the more than $2.5 trillion Washington has spent on coronavirus aid. Not only do House Speaker Nancy Pelosi and her caucus now seek billions more to bail out state and local governments, they also hope to pad the federal highway fund by more than $500 billion over the next five years to pay for green transportation projects.
In order to fund their progressive wish list, which focuses more on mass transportation and light rail rather than bridges and roads, Reason magazine reports, Congress would have to double the federal gasoline tax to nearly 37 cents a gallon.
Proponents of such a plan note that the federal tax — now at
18.4 cents a gallon for gasoline and 24.4 cents for diesel fuel — is not indexed to inflation and has not been increased since 1993. That may be a compelling reason for raising the levy — as long as there were also a provision to recover funds from electric and hybrid vehicle drivers, who use the infrastructure but pay little of the taxes necessary to build and maintain it. A slight boost in the federal gasoline tax might also make sense if the proceeds were directed to truly vital transportation infrastructure projects rather than boondoggles such as high-speed rail and the like (see: California).
And then there are state and local gasoline taxes. Pennsylvania leads the nation with a 77.1-cent gasoline tax on each gallon sold. Nevada imposes a relatively modest per gallon levy of 33.8 cents, although Clark County voters recently approved the extension of an annual hike in the gasoline tax for transportation improvements that will leave Southern Nevada drivers paying 98.2 cents a gallon by 2026.
The point is that, in many cases, the rising costs of gasoline are not unconnected to the taxes imposed by the very same politicians who try to gain cheap political points by railing against high fuel costs. In inflation-adjusted terms, according to inflationdata.com, gasoline prices in 2016 were equivalent to those in 1972. It’s not unusual, given market conditions, for governments at all levels to earn more from a gallon of gasoline than the oil companies.
Any plan to double the federal gasoline tax will be unlikely to pass the GOP Senate. But the next time you hear an elected official pound the table in anger over high gasoline prices, remember that the local, state and national governments are anything but innocent bystanders.