By DeEtte L. Loeffler, J.D., L.LM, Taxation
The federal Highway Trust Fund will run out of money this month. Previous efforts by Congress to provide a mechanism to fully fund it have merely postponed its demise. Reasons for the shortfall include (i) that the tax has remained at 18.4 cents since 1993, (ii) decreased gas consumption from fuel efficient, hybrid and electric vehicles, and (iii) increased construction costs. According to the American Society of Civil Engineers, the cost of critical infrastructure repairs (roads, bridges, and transit) will exceed the funds currently budgeted for them by $846 billion over the next five (5) years.
Two bills recently introduced in the House would increase the federal gas tax and index it for inflation. H.R. 680, the Update, Promote, and Develop America’s Transportation Essentials Act of 2015 and H.R. 2971, the Highway Trust Fund Certainty Act would both increase the tax on gasoline. Under HR 680, the tax would increase in increments to 33.3 cents per gallon by 2018 at which time it would be indexed for inflation. HR 2971 would immediately increase the tax to 28.4 cents per gallon and index it for inflation. Neither bill has the support of President Obama, Hilary Clinton or Donald Trump, presumably because increasing this tax is unlikely to raise sufficient funds to meet the anticipated costs of repairing infrastructure.