U.S. Transportation Secretary Elaine Chao said at a press conference on Tuesday that the a gas tax hike is “on the table.”
The federal gas tax has not been increased in 25 years, according to Secretary Chao. Utilizing the gas tax as a form of revenue to supplement the Trump Administration’s $1.5 trillion where $200 billion in direct federal funding, 13 percent of overall funding.
According to Secretary Chao, key decisions from the state and local levels on infrastructure will be critical to advancing Trump’s agenda. Chao stated that federal dollars will be used as “seed money to encourage investment by the states and local sectors.”
Some analysts say that limited funding from the federal government will put a strain on infrastructure funding at the state and local levels.
The gas tax increase has been proposed by the U.S. Chamber of Commerce to replenish the Federal Highway Trust fund. A 5 cent per gallon increase for 5 years is the proposal from Tom Donohue, U.S. Chamber President.
In an Op-Ed in USA Today, Donohue said the following about the gas tax:
The modest hike we’re proposing would cost the average American only about $9 a month in additional gas taxes. That figure, however, is dwarfed by the cost of inaction.
The tax is currently 18.4 cents for gasoline and 24.4 cents for diesel and goes into the trust fund. The federal tax is 18.4 cents for gasoline and 24.4 cents for diesel which is placed into the Federal Highway Trust Fund.
The federal government does not have a long-term funding source for transportation and has long been resistant to increasing user fees such as the gas tax. Money from the gas tax goes toward the Highway Trust Fund to pay for national road projects, but it has not been raised since 1993. This lack of a tax hike is said to have eroded the ability to count on the trust fund to finance national infrastructure projects.
The U.S. Chamber of Commerce contends that updating infrastructure through the gas tax will help lead to more job creation. Discussions of the potential gas tax hike will look to draw opposition from conservatives and liberals within on both sides of the political aisle. The conservative wing of the GOP and classical liberals in the Democratic Party believe gas taxes are generally regressive on Americans.