Perhaps the only thing in Congress more controversial than limited leasing of the Arctic National Wildlife Refuge is higher federal gasoline taxes. And Rep. Don Young (R-Alas.), chairman of the House Committee on Transportation and Infrastructure, wants both this year. House approval came for ANWR leasing but the odds that proposal will become law aren't great. The White House likes leasing, but the Senate, which is still debating an energy bill, consistently rejects it.
Gas tax
Lawmakers are more worried about a transportation spending measure that must be reauthorized this year. Young says the Bush administration's $247 billion plan falls short. His proposal adds another $75 billion to the highway trust fund by raising the federal gasoline tax by 5¢/gal and indexing it for inflation.
"I would argue that the people who drive on our nation's highways and ride transit would rather pay a little more at the pump for safer roads and less congestion," Young told the US Chamber of Commerce June 11. "In fact, recent polling has shown that two thirds of those surveyed would support an increase if they were confident the money would be spent on addressing this congestion crisis."
But raising gasoline taxes may be even more elusive than ANWR leasing. The White House opposes any increase from the current 18.4¢/gal tax; diesel taxes are now 24.4¢/gal. And powerful House Majority Leader Tom DeLay (R-Tex.) is siding with the White House.
Congress modestly increased fuel taxes in 1993 as an alternative to a more expensive Clinton administration "btu tax" designed to encourage cleaner-burning transportation fuels. A wide coalition of business interests converged on Capitol Hill to defeat that tax.
Today, larger business trade associations, such as the US COC, are not rejecting an increase, although they are not formally endorsing more taxes either.
State taxes
Budget-trapped states also are under pressure to raise fuel taxes. A new American Petroleum Institute report shows the nationwide average tax (federal and state) on motor fuel is rising.
Gasoline taxes rose 0.7¢/gal over the past year and now average 42.7¢/gal. Diesel fuel taxes rose 0.4¢/gal and average 48.4¢/gal.
API does not endorse or condemn Young's proposal. But historically its views on fuel taxes have been similar to the American Highway Users Alliance, which includes several oil companies. AHUA says it will accept a modest increase "as a last resort and under key conditions" that stipulate the money goes for highway improvements.
API notes, however, that taxes on the federal and state level already account for a "significant" part of the pump price. "Federal and state taxes are shown to account for 27.7% of the pump price of gasoline and 34.1% of the pump price of motor diesel fuel."
API says those percentages are in effect a nationwide sales tax of 38.4% on gasoline and 51.7% on diesel fuel. In contrast, state sales taxes are from 3-7%, averaging 5% nationwide.