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Homepage / TAXES

Debt Panel Heads Endorse Fuel Tax Increase

photo of Fawn Johnson
November 10, 2010

The chairmen of President Obama’s fiscal commission have proposed a 15-cent fuel tax increase to pay for highway and rail maintenance and repairs in order to ensure that general Treasury funds don’t have to be raided for those costs in the future.

The idea is strikingly similar to one floated last week by Sens. Tom Carper, D-Del., and George Voinovich, R-Ohio. The two senators sent a letter to the debt commission Friday proposing a 25-cent-per-gallon increase in the fuel tax, to be gradually rolled out over the next three years. Under the Carper-Voinovich plan, 15 cents would go to the Highway Trust Fund and the other 10 cents would be devoted to shoring up the budget.

The chairmen of the commission — Erskine Bowles, a Democrat and a former White House chief of staff under President Clinton; and former Sen. Alan Simpson, R-Wyo. — went along with the first part of Carper and Voinovich’s plan, saying a 15-cent per-gallon increase in fuel taxes should eliminate the need for further general bailout funds for highways.

 

A fuel tax increase isn’t politically popular, but then again, most of the draft debt reduction proposal from Bowles and Simpson is going to be hard for lawmakers to swallow. Among their other items on the list are cuts in Social Security and farm subsidies.

In a statement, Carper said he was encouraged to see the fuel tax increase placed into the draft. “This proposal will address our transportation needs, create hundreds of thousands of jobs, and reduce the deficit,” he said.

The fuel tax increase is part of a larger proposal from the two heads of the bipartisan debt commission on how to bring the country’s deficits in line. The framework could be changed between now and December 1, when the full commission must vote on it.

Simple maintenance of highways cost taxpayers $34.5 billion in 2008 and 2009 over and above the money raised from the current gas tax, Carper and Voinovich said in their letter to the debt commission heads.

Business groups and unions involved in transportation also support a fuel tax increase, and they have weighed in specifically to support Carper and Voinovich’s proposal. That leaves some Republicans unmoved. Rep. John Mica, R-Fla., who is expected to chair the House Transportation and Infrastructure Committee next year, has said he won’t entertain the idea of a fuel tax increase, or any tax increase, for that matter, as a means of paying for infrastructure upgrades.

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