The gas tax makes sense. Why is Biden considering stopping him?

The gas tax is the only good tax, so it makes sense to be the only one President Joe Biden is considering stopping.

“I hope to make a decision based on the data I’m looking for by the end of the week,” the president told reporters Monday whether he would support a federal gas tax holiday. Suspension of the federal gas tax of 18 cents a gallon will obviously require some votes in Congress. Biden’s final “decision” on whether to call for this action in Congress really comes down to whether he thinks it’s politically reasonable.

Declaration on tax holidays for natural gas in both countries red and blue suggests that this would be a popular idea, especially when a gallon averages close to $ 5 across the country. Five states, including Florida and New York, have already suspended their gas taxes, notes CNET – a move supported by 72 percent of respondents in a recent survey PoliticianMorning Consult Survey.

Sens. Maggie Hassan (D – NH) and Mark Kelly (D – Arizona) introduced legislation as early as February to suspend the federal gas tax by December 2022.

Senate Minority Leader Mitch McConnell (R-Ky.) Threw cold water at the idea at the time, saying after that, “Democrats want to drill a $ 20 billion hole in highway funding so they can try to cover up the effects of their own liberal policies on working Americans.”

Back then, gasoline was under $ 4 a gallon. Maybe today’s higher prices will still encourage national Republicans to follow their guerrilla allies at the state level and get involved with a gas tax vacation.

Even if this is a popular political move, it would certainly be bad politics. People rightly hate taxes. But the federal gas tax is more appropriate to see as a consumer tax that charges people for a service they consume.

Fuel taxes paid by motorists are collected in the federal highway fund, which is then spent on building and maintaining the roads and bridges that these same drivers use. Federal taxes on gas, with the exception of the diesel tax, make up about 60 percent of tax revenues dedicated to the Trust Trust Fund.

Justice requires charging drivers for the roads. The only alternative would be to require non-motorists to subsidize the driving infrastructure for them.

The fuel tax, similar to the consumer tax, also supports road costs in line with road demand. It is more difficult to finance bridges to nothing if people’s fuel consumption and the taxes they pay on it do not generate enough revenue for new projects.

Therefore, the suspension of the gas tax makes road costs less fair and less efficient. This would also be fiscally expensive. Road construction and maintenance are not free just because gas prices are high. The suspension of the gas tax only gives road users a break to pay for it.

If the tax holiday was accompanied by a highway cost holiday, perhaps this could be justified. But Hassan and Kelly’s proposal replaces every last dollar of lost gas tax revenue with general fund revenue. This means that non-driver taxpayers are now on the hook for these costs.

What’s worse is that the gas tax holiday would further untie the weakening link between gas taxes and road costs – creating the ground for more subsidies and costs.

In the good old days, the cost of federal highways was covered entirely by gas tax revenues. In recent decades, rising federal road and transit costs and slower rising gas tax revenues have meant that the Highway Trust Fund requires multiple transfers from the general fund.

In 2008-2020, Congress changed $ 155 billion in the total revenues from the fund to the trust fund of the highways. The Infrastructure Act, signed by Biden in November 2021, transferred another $ 118 billion in general fund revenue to the Highway Fund, both to prevent impending bankruptcy and to pay huge new road costs.

Suspending the gas tax would completely transform travel costs, albeit temporarily, into a federal-subsidized transfer program.

Of course, the federal gas tax is an imperfect consumer tax. Part of the gas tax revenue is redirected to public transport projects that drivers will not use. They can also pay for roads they do not drive on. Fuel consumption is an imperfect example of how much wear and tear is required by individual drivers on the road. This means that electric vehicles and heavy trucks are taxed in this regard.

This reality recommends that the gas tax be made more as a consumer tax or even replaced by a mileage-based charge which could more accurately charge drivers for what they use. This policy is not yet fully ready for the primary time – there are many logistical, technological and confidentiality issues that need to be addressed – but this is the direction in which transport policy needs to move.

Giving a gas tax is a step in the wrong direction.

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