By STEVE BRAWNER
Efforts to suspend the gas tax have stalled in Congress and went nowhere at the state level in Arkansas.
President Trump in May proposed temporarily suspending the tax. Doing so would partially offset gas prices that have risen to $4 per gallon because of the war with Iran. The idea seemed to have a lot of momentum at first, but no more.
Suspending the gas tax would require congressional action, which so far isn’t coming. Sen. Tom Cotton told the Arkansas Democrat-Gazette that it would not be a “durable solution” and that it would reduce funding for Arkansas highway projects.
Instead, he said the way to reduce oil prices would be to win the war and open the Strait of Hormuz that Iran has partially closed, and through which 20% of the world’s oil supply floats.
Motorists pay taxes of 18.4 cents per gallon for gasoline and 24.4 cents for diesel at the federal level.
Last month, state Rep. Kendon Underwood, R-Cave Springs, likewise called for Gov. Sarah Huckabee Sanders to call lawmakers to Little Rock to suspend Arkansas’ state-based fuel taxes for 90 days. Those taxes equal an additional 24.7 cents per gallon of gasoline and 28.5 cents for diesel fuel. It did not gain traction, either.
Had Congress approved Trump’s proposal, the Highway Trust Fund would have lost its primary funding source. A report on congress.gov says that fuel taxes accounted for 82% of Highway Trust Fund revenues between fiscal year 2015 and fiscal year 2024.
The report quoted the Bipartisan Policy Center’s finding that suspending the tax from May through September would reduce revenues by $17 billion.
The Highway Trust Fund, by which the federal government provides dedicated money to highways, will face a zero balance in two years if revenue and spending trends continue. If that happens, the Federal Highway Administration could reduce funding for states.
Arkansas Department of Transportation Director Jared Wiley said in a written statement that a federal gas tax suspension would deplete the trust fund even faster than projected. If it goes too low and the federal government reduces the money it sends to Arkansas, active construction projects could be suspended while new projects “would be delayed indefinitely.”
Wiley didn’t mention it, but one other option would be for Congress to bridge at least part of the difference by transferring money from elsewhere and increasing the federal budget deficit.
The gas tax is unpopular, which is why Congress hasn’t raised it at the federal level since 1993.
It’s unpopular even though it probably is the federal government’s most efficient tax. As noted by the report on Congress.gov, it’s charged at the wholesale level to about 850 entities, not at the pump. As a result, overhead costs are low.
Historically, it’s also been one of the fairer taxes because it’s paid by the consumers using the government service. If you drive more, you pay more.
It’s less fair now. Drivers with newer hybrid cars pay less for the same number of miles driven by someone getting by with an old clunker. Drivers of expensive electric cars pay nothing per mile at the federal level.
The timing of all this is noteworthy in that Congress is considering a new five-year surface transportation reauthorization bill, which would replace the current Biden-era one that expires Sept. 30. The House Transportation & Infrastructure Committee on May 22 approved the BUILD America 250 Act, which includes a $130 fee for electric vehicles and a $35 fee for hybrids. The vote was 62-2. Arkansas’ Reps. Rick Crawford and Bruce Westerman are committee members and voted for the bill.
It still must pass the House, while the Senate must pass its version. The two versions would have to be reconciled, and then Trump would have to sign it.
Meanwhile, Arkansas’ Rep. Steve Womack chairs the Transportation, Housing and Urban Development subcommittee, which handles funding allocations for the Department of Transportation. The subcommittee has advanced the appropriations bill, which also has a long way to go before reaching the president’s desk.
This is all occurring as the November elections are approaching. Congress probably won’t get much done the rest of this year. In fact, it often won’t even be in town.
There won’t be much more funding for highways anytime in the near future.
On the other hand, current taxes won’t be suspended, which is good. No one likes to pay taxes – at the pump or anywhere. But roads don’t build themselves.
Steve Brawner’s column is syndicated to 24 news outlets in Arkansas. Email him at brawnersteve@mac.com.