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Could Restructuring the Gas Tax Fund the Transportation Bill?

10:55 AM EDT on November 1, 2010

Would a major change to the national gas tax stand a chance after tomorrow's election?

Perhaps so, but not without postponing one of President Obama's key priorities, according to a recent story in the Wall Street Journal. Apparently, state DOTs have been pitching a proposal to Republicans and Democrats to change the structure of the gas tax instead of ending the Bush tax cuts on high earners. By converting the gas tax from today's 18.4 cents per gallon rate into a percentage of sales, it is hoped, the government could gradually increase revenues without imposing an immediate tax increase.

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This would be a significant departure from current policy when it comes to fuel taxes. Since 1993, the gas tax has been held at 18.4 cents. If the rate had been increased to match inflation, today it would be 27.8 cents, according to Josh Barro at Real Clear Markets.

Sean Roche at Network blog Newton Streets and Sidewalks agrees with the impulse to restructure the gas tax, but says the proposal may not go far enough to bring fuel taxes in line with infrastructure spending:

Adoption of an ad valorem gas tax would be a step in the right direction. "Spending on road construction and maintenance grew almost exactly in line with the economy from 1994 to 2008 - a 102 percent increase." As a consequence, "federal, state and local governments grew road spending faster than road revenues by borrowing more and by diverting general tax revenues to spend on roads."

Ultimately, though, simply stemming the backward march of gas-tax revenue is not enough. We need to make up lost ground. We need to account for the impact of increased fuel economy. And, we need to capture more of the costs of driving from those who drive (or consume goods that have been shipped). One of the virtues of switching to an ad valorem gas tax, though, is that it has no immediate impact, but preps for the future.

It's just math. Federal and state gas taxes are too low.

Elsewhere on the Network today: Lets Go Ride a Bike asks whether aggressive urban cycling guides alienate women and other potential new cyclists. Ecocity Publicity Mobility examines Copenhagen's policy of gradually replacing car parking spaces with bike parking. And WashCycle says that before condemning cyclists for "bad behavior," critics should examine whether safe alternatives are available.

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