Assess Gas Tax By the Dollar, Not the Gallon?

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Tanya Snyder points to another interesting idea for the transportation funding:

When the federal gas tax was set at 18.4 cents per gallon, it represented 17 percent of the cost of a gallon of gas. Now it’s barely 5 percent.

That was 20 years ago. Some say the answer for today isn’t just to raise the gas tax but to re-imagine it. John Horsley, executive director of the American Association of State Highway and Transportation Officials, who retires at the end of this month, made his proposal yesterday at the annual Transportation Research Board conference.

He’d like to see the fixed gas tax replaced with a percentage sales tax on fuels. He said such a move could avert a looming “transportation fiscal cliff.” An AASHTO press release explains:

Under Horsley’s proposal, sales tax rates on fuels would be set at a level that restores solvency to the Highway Trust Fund. The fund is currently spending $15 billion more annually than the revenues it receives. The change would support spending on highways and transit over the next six years at $350 billion. If the program were limited to expected excise tax revenues, it would have to be cut to $236 billion.

This entry was posted in Budget, Transportation.

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