No free rides

December 08, 2005

Ronald Reagan did it in his first term. George H. W. Bush approved of one, too. So did Bill Clinton. They all raised the federal tax on gasoline and diesel fuel. The tax goes into a trust fund that finances highway and transit projects across the country. It's a fair and efficient kind of user fee: The more people drive, the more they pay for repairs and congestion relief. And drivers don't seem to mind. Last month, Washington state voters declined to rollback a whopping 9.5-cent gas tax.

Despite all this, the U.S. Chamber of Commerce is predicting the federal government will run short of funds for public transportation and roads in three years. In other words, the $286.4 billion transportation bill President Bush signed into law this fall isn't fully paid for - and that's alarming.

Much was made of the wasteful earmarks Congress wrote into that six-year spending plan, but the uproar masked a bigger issue: the government's inability to keep up with transportation needs. State transportation officials say the country is spending only about two-thirds of what's needed each year to keep up its infrastructure. The chamber's recent report suggests the cumulative shortfall - the difference between what's needed and what the government is likely to collect in taxes - could reach $1.1 trillion by 2015.

Part of the problem is that unlike most every other form of federal tax, the gas tax isn't indexed to account for inflation. Currently, it's 18.4 cents per gallon no matter whether gasoline sells for $1.98 a gallon or $3.50. The tax has been the same for 12 years, but thanks to today's higher prices, the trust fund has lost about one-third of its purchasing power.

The chamber offers a number of possible solutions but cites indexing (linking it to gasoline prices or the consumer price index, for instance) as the strategy with the most immediate impact. What the business group doesn't recommend is dramatically reducing highway and transit spending. That would cost the country many billions of dollars in lost productivity, the report estimates.

Last year, President Bush warned Congress that he would veto a 5-cent gas tax increase. It's time he changed his mind. Under the elder President Bush and Mr. Clinton, gas tax increases were used as a means to reduce the deficit for one or two years. It worked - and there's an argument for doing it again. The fiscal 2005 budget deficit was $318.5 billion, the third-highest in history.

Nobody wants to pay more in taxes, but building infrastructure is a long-term investment. The study notes that the total cost of driving a car is up to 60 cents a mile. How much of that goes to the federal gas tax? Just one penny. That's a bargain at twice the price.

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