Politicians, Activists Call for Increased Gasoline Taxes

Published February 12, 2015

Just as Americans are receiving some relief from high gasoline prices, some politicians and activists want to increase in the federal gasoline tax.

Declining Revenues

Gas tax revenues have declined in recent years as drivers shifted to more fuel-efficient vehicles and reduced their miles traveled to reduce fuel costs. These moves coincided with federal plans to increase the average vehicle fleet fuel efficiency by subsidizing purchases of electric and hybrid vehicles.

However, high gasoline prices and the government’s success in improving fleet fuel efficiency decreased revenues for the highway fund. After 16 straight years of rising gasoline tax receipts, from 1991 to 2007, revenues fell from an all-time high of $32.64 billion in 2007 to $31.01 billion in 2009, recovering slightly to $31.04 billion in 2011. The 2009 and 2011 totals were both lower than at any time since 2001.

Currently, drivers pay 18.4 cents per gallon of gasoline in federal gasoline taxes. State governments take an average of 31 cents per gallon in taxes. Between the federal and state governments, the average motorist pays nearly 50 cents per gallon in gasoline taxes.

Environmentalists have long lobbied for higher gas taxes to discourage travel, thus reducing greenhouse gas emissions.

Climate concerns aside, some politicians are pushing for higher gas taxes because road construction and maintenance costs have increased while revenues have declined. Treating taxes as a user fee, they argue Congress and the president should raise gas taxes to meet drivers’ demands for more and better highways.

Redirecting Funds

Many analysts, however, reject the user fee argument because governments have increasingly been redirecting gasoline tax revenues to projects having nothing to do with road construction and maintenance.

Zack Slingsby of the Heritage Foundation noted the federal government diverts 17 percent of federal gas tax revenues to mass transit programs via the federal Highway Trust Fund, “even though [mass transit’s] share of the nation’s surface travel amounted to roughly 1 percent and users pay nothing into the [Highway Trust fund].”

In addition, the fact mass-transit recipients of federal gasoline tax dollars are concentrated in just six cities—Boston, Chicago, New York, Philadelphia, San Francisco and Washington, DC,—subverts the argument federal gasoline taxes merely reflect the cost of government building and maintaining roads nationwide, Slingsby noted.

Marlo Lewis, a senior fellow of the Competitive Enterprise Institute, notes programs as far afield as visitor centers, bike paths, museums, and other such projects receive highway funds. Lewis says politicians have become accustomed to treating the highway trust fund as a slush fund to be raided for projects popular with their constituents, then falsely blaming the declining revenues for the shortfalls.

“If more federal tax dollars are truly needed to keep up with rising road construction and maintenance costs, then plenty of available federal gasoline tax dollars are already being paid by motorists but diverted to mass transit and other boondoggles,” Lewis said.

Lewis noted this process is particularly unfair to low-income individuals, “Gas taxes are regressive, taking a proportionately bigger bite out of the paychecks of low-income households. After a decade of pain at the pump, it’s time to let American families, millions of whom struggle to make ends meet, to enjoy some relief,” he said.