The federal tax on gasoline was introduced in 1932 at the modest cost of a penny per gallon. The tax was designed to be a one-year stopgap to increase funding and cut deficits, but like most “temporary” government programs, it has never gone away. Indeed, it has continued to grow.
Creation of the interstate highway system provided justification for the continued tax, but decades after that massive project was completed, the tax stubbornly endures.
Federal gasoline taxes have been used to fund a variety of projects other than building and maintaining highways, which was the stated purpose for which they were implemented. Today, the tax is viewed as a permanent part of the national landscape, and a bill in the House of Representatives has been introduced to raise the federal tax on gasoline by 15 cents per gallon, which, if passed, would mean drivers would pay Uncle Sam 33.4 cents per gallon at the pump for gasoline, and 42.8 cents for every gallon of diesel fuel. That’s a whopping 45 percent increase.
This is a misguided proposal. Advocates of the increase insist the higher tax is necessary to make up for federal transportation revenue shortfalls, which is based on the premise that the federal government ought to be responsible for a good chunk of the nation’s transportation infrastructure. States and localities are better suited to assume that responsibility and approach it with greater efficiency.
Research has demonstrated that federal intervention increases both construction and administrative costs anywhere from 20 to 30 percent. In addition, federal intervention discourages innovations such as toll roads, variable congestion pricing and HOV lanes, which arise when localities look for creative ways to maintain roads and decrease congestion. Accountability often is minimized when Washington writes the checks.49 comments on this story
This tax exacerbates the problems it was designed to solve; one which, over the years, some in Washington have noticed. Back in his 1982 State of the Union address, President Ronald Reagan called for the abolition of the gas tax and the federal role of transportation to be “turned back” to the states. Bills have been introduced in Congress to allow states to opt out of federal funding, but to no avail.
That’s unfortunate. States can do this job better than Congress because they understand local transportation needs better, and they need to be empowered to do so. This “temporary” federal gasoline tax has lingered eight decades after its expiration date. It ought to be repealed altogether.