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Bill to cut federal gas tax? Bad idea, bad public policy

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My U.S. congressman reintroduced a bill last week that would cut the federal gasoline excise tax by 10 cents a gallon each time the retail price of unleaded regular hits $3. That gesture may please his rural constituents as he faces a tough re-election campaign in ’08, but it’s a wrong, short-sighted policy that will cost his constituents and other taxpayers money in the long run.

Rep. John R. “Randy” Kuhl says this bill, a reprise of his 2005 attempt to cut the gasoline tax, saves money for residents of his rural New York state District 29:

The timing is right for this initiative. In our predominately rural area of New York, people depend on their cars and have very few transit options. This proposal, coupled with efforts at the state level to cap the state gas tax when the price gets too high, would result in savings for consumers in times like these.

As one of those residents, I’d much rather see him try to appropriate, earmark or steal money to address those “very few transit options.” During his last campaign, he bragged in TV ads that he had brought a quarter of a billion dollars into his district. Just 10 percent of that would help increase those “transit options.” I’ll also leave the argument to others that a higher, not a lower, tax would drive down demand — and consequently drive down the price.

Limited by his Republican, cut-taxes-everywhere vision, Rep. Kuhl overlooks what that gasoline tax represents. It’s the money the federal government uses to repair highways and bridges. That money — the Federal Highway Trust Fund — is rapidly being depleted. The federal gasoline tax has not been raised in 14 years, and reports say the trust fund’s interest generated will fall below planned federal spending in 2009.

Any tax cut, especially if coupled with a legislated increase in corporate average fuel economy (the CAFE standards) would result in less gasoline tax revenue for the trust fund. At the moment, the federal gasoline excise tax is 18.4 cents a gallon.

How much money we talkin’ here?

According to the federal Energy Information Administration, the retail price of unleaded regular has been above $3 a gallon since the first week of May. Let’s call that 30 days. Americans use about 385 million gallons a day. Of the 18.4 cents per gallon tax, about 15.44 cents goes to the highway trust fund. That means each day about $59.5 million goes to the fund.

But if Rep. Kuhl’s tax-cut proposal passes, knocking that tax down by 10 cents a gallon, only about $21 million per day would be raised. Over a month, that’s $628 million. Over a summer of plus-$3 gasoline, that’s about $1.9 billion.

That’s the money that repairs the rutted roadways and braces the aging bridges. If you want them fixed — and safe — then pay up. According to the AP story:

By the middle of the next decade, the highway trust fund will be providing $100 billion to $150 billion below real needs for building highways and bridges, predicted Rep. Peter DeFazio, chairman of the House Transportation and Infrastructure subcommittee on highways and transit. [emphasis added]

How big is the problem? The National Highway System consists of 160,000 miles of roads, including 40,000 miles of interstate highways. This 2003 report by the Surface Transportation Policy Partnership, a non-profit engaged in transportation reform, says the U.S. highway system is sick: “Nearly 70 percent of the nation’s urban and suburban roads are in less than good condition.” In New York state, as of 2001, about 50 percent of the roads were in less than good condition, it says.

Ironically, in Rep. Kuhl’s district, the Federal Highway Administration has designated state Route 17 as a “high-priority corridor” and is rebuilding it as Interstate 86 to meet interstate highway standards. It will become a federal highway — requiring federal money from the highway trust to maintain it. Yet his bill would reduce the amount of money available to the federal highway system for repair and reconstruction.

Bad roads hit drivers’ wallets because of car repair costs, too. In 2001, according to a Stateline.org report:

The Washington, D.C.-based, non-profit Road Information Program (TRIP) thinks it’s more of the latter. Based on its analysis of Federal Highway Administration data, American motorists are spending $41.5 billion a year, or about $222 per driver, on extra vehicle repair costs that could be avoided if the state and federal governments would beef up funding for highway and bridge improvements. [emphasis added]

Rep. Kuhl’s bill has only one co-sponsor so far. Perhaps his 433 other colleagues recognize that reducing the gasoline tax would be bad public policy. Rep. Kuhl certainly doesn’t.

xpost: Scholars & Rogues and 5th Estate

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Written by Dr. Denny Wilkins

June 5, 2007 at 4:14 pm

Posted in Uncategorized

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