Another Day, Another Revelation That a Gas Tax Hike Is Necessary

Add another vote in favor of increasing the gas tax to pay for infrastructure investment. A few weeks ago, a couple of senators proposed raising it 25 cents. Then the deficit commission came out in favor of a 15-cent hike. And now, three left-leaning think tanks – Demos, the Economic Policy Institute, and The Century Foundation – are calling for a bump in the fuel tax too.

The three groups have come together in a coalition they’re calling Our Fiscal Security to release a new report, Investing in America’s Economy: A Budget Blueprint for Economic Recovery and Fiscal Responsibility. In it, they throw their support behind a gas tax proposal made last year by the Congressional Budget Office [PDF].

Here’s what Demos, et al. have to say about it:

Increasing taxes on motor fuels would raise significant revenues while decreasing negative social externalities such as pollution and traffic congestion. Revenue from the tax would recapitalize the highway trust fund, thereby providing badly needed funding for transportation infrastructure.

Including state and local taxes, CBO estimates that the average national tax rate per gallon of fuel is 40.3 cents on gasoline and 46.6 cents on diesel. CBO projects that raising federal fuel excise taxes by 25 cents a gallon would generate $305.1 billion over 2010-19… Raising federal fuel excise taxes by 50 cents a gallon, for example, would generate $604.8 billion over 2010-19 (CBO 2009).

Even better, their priority for the revenue is mass transit. They say transit reduces emissions and improves access for the poor.

Investing funds into a modern, interconnected, and affordable public transit system could both reduce our dependency on fuel and increase productivity by reducing the amount of time people sit in traffic. Investment in repairing existing roads and building new and modern public transit systems could also create a significant number of jobs.

Which brings us back to the question of how to fund these critical improvements… which brings us back to the gas tax. How many economists need to get behind this idea before politicians are willing to consider it?

The “Our Fiscal Security” gang is promoting a gas tax increase as just one tiny plank in a wide-ranging, comprehensive platform to achieve “fiscal responsibility without undermining our national strength.” That sounds like something we can all agree on, doesn’t it?

Meanwhile, as the lame duck session takes up where they left off for the Thanksgiving recess, lawmakers are trying to outdo each other at deficit-busting fiscal conservatism. But when it comes to raising revenues, they’re as anti-tax as they’ve ever been.

Are their constituents really ready to let investment in infrastructure wither away? If not, Capitol Hill politicians are going to have to face the music sooner or later and find a new way to pay for essential projects – or else keep on spending our grandkids’ money.