Increase fuel tax, group advises

But call it a fee, think tank says

DALTON LaFERNEY

Part of the national and state debate on how to fund the nation’s infrastructure needs is a rhetorical tussle over what to call the costs at the pump: Are the collections per gallon of fuel userbased fees or fuel taxes?

To professionals in commercial transportation, the people who use the roads occupationally, it’s more of a fee. For them, fuel costs are included in the cost to do business. For the average motorist, it’s a tax.

The Washington-based American Transportation Research Institute recommended this month that the government raise fuel taxes to fund infrastructure projects, and that the government call it a user-based fee in an effort to garner support among an American public that generally rejects tax increases.

Calling it a tax, the institute wrote, “is likely the underlying cause for the eroded value of federal motor fuels tax revenues.” Congress has not raised the fuel tax since 1993.

With virtually every infrastructure think tank and association calling for infrastructure improvements, the U.S. government will soon turn its gaze toward

road and bridge spending. President Donald Trump has called for $1 trillion in funding.

Dozens of states have already increased their gasoline taxes.

The Arkansas Department of Transportation is conducting an informal public survey to assess which of five methods to obtain infrastructure-fixing dollars state residents are most willing to support. According to early data from the department, raising the fuel tax is the second least popular method, behind adding an entirely new sales tax on motor fuels at the wholesale level.

Arkansas is increasingly reliant on federal funds for infrastructure needs. More than half of the infrastructure spending here comes from the federal government, Transportation Department spokesman Danny Straessle said. It is projected that more than $500 million in state funding will be needed to

maintain Arkansas’ highways over the next 20 years.

Trucking in the state of Arkansas employs more than 84,000 people, according to the Arkansas Trucking Association. Shannon Newton, the association’s president, said no other industry relies on the highways here like truckers.

“It shouldn’t be lost on anyone that our offices are the roads and businesses of our nation,” she said.

A greater portion of the federal Highway Trust Fund’s fuel tax revenue comes from the general motoring public than from the trucking industry. In 2014, about $40.8 billion from fuel taxes went into the fund, according to data from the federal Office of Highway Police Information. About $9.6 billion came from diesel and special fuels taxes. The excise tax on trucks, buses and trailers produced about $4.5 billion. Roughly $1.1 billion was from the heavy vehicle tax. Still, those three categories fall short of the $24.9 billion that came from gasoline revenue.

Fees imposed on the trucking

industry will eventually funnel onto the general consuming public. If truckers have to pay more to drive across the country, they will put more pressure on their customers, whose products then cost more to ship.

Vanessa Williamson, a fellow in government studies for the Brookings Institution, interviews voters about their feelings on paying taxes. From research she conducted while at Harvard University, Williamson found people were more willing to pay taxes for schools and local infrastructure needs such as roads, parks and sewer systems.

“I think it’s a bit overstated to say you can’t convince voters to raise taxes,” she said. “People see infrastructure as one of the most important things to spend tax money on.”

The House passed its version of a tax-code overhaul bill last week, but absent from it is any mention of growing the Highway Trust Fund. Multiple trade groups, including the American Road and Transportation Builders Association, called the House bill a failure

for infrastructure improvements. Attention is now on the Senate, whose language on infrastructure includes some tax breaks on corporate private jets, but nothing more toward the federal fund.

Right now on the federal level, each gallon of gasoline is taxed 18.3 cents, and for diesel, it’s 24.3 cents. Consumers do not pay these costs directly — the U.S. Treasury Department collects them from fuel distributors. But the more that companies have to pay for fuel, the higher their prices to consumers in general.

Arkansas policy makers are looking toward the 2019 legislative session to answer questions about funding for infrastructure projects. For Jim Wooten of the Arkansas Good Roads Foundation, the solutions the public, lawmakers and industry decide on will drive the economic development of the state for years to come.

“We are at a defining moment in the economic future of our state,” Wooten said. “The longer we wait, the [more] costly it will become.”