Lawmaker looks to crude oil tax, indexed diesel tax for Highway Trust Fund solution; Plan would remove gas tax

| June 17, 2014

U.S. Capitol

As the Highway Trust Fund’s insolvency looms, Rep. Peter DeFazio (D-Ore.) has introduced a highway funding plan that would repeal the federal gas tax in favor of other funding options, like taxing oil barrels and indexing the diesel tax to inflation and fleet fuel economy.

DeFazio’s Repeal and Rebuild Act is designed to be a long-term solution that he says would create jobs, repair the U.S.’ crumbling infrastructure and “break the transportation funding impasse that has plagued Congress for years.”

The act would:

  • Repeal the federal gas tax

  • Increase the tax on a barrel of oil that is processed into gasoline to $6.75 and index it to construction cost inflation and fleet fuel economy

  • Index the diesel tax to construction cost inflation and fleet fuel economy

  • Bond the new revenue to backfill the Highway Trust Fund shortfall

  • Support a $324 billion six-year reauthorization

In the bill’s first year, it would raise less than the 18.4-cent gas tax but would provide potential short-term relief to buyers, DeFazio says.

Rep. DeFazio

Rep. Peter DeFazio

But the barrel tax would be indexed to the Department of Transportation’s National Highway Construction Cost Index and to CAFE standards, which would help mitigate losses that could be seen from higher fuel economy — something the gas tax does not do.

However, despite pushes by those in Congress like DeFazio and Sen. Barbara Boxer, some lawmakers have suggested there’s neither enough time or will to tackle a major highway funding bill prior to the Sept. 30 expiration of MAP-21, the current highway funding act.

“In a three-week period, to responsibly walk through all the different approaches, I just think senators are saying that’s a bit much,” Senate Finance Chair Ron Wyden told Politico last week. “It’s hard to make the case that you can put all that together in three weeks.”

House leadership, meanwhile, has floated a plan to trim the services offered by the U.S. Postal Service and use the expected cost savings over 10 years to make up for the fuel tax shortfall. But Senate leaders  and the Obama administration have both dismissed the proposal.

“We’ve got to get past the gimmicks in transportation and really get serious about trying to get a long-term strategy done,” Transportation Secretary Anthony Foxx said.

Editor’s note: This story was compiled by the editors at sister site Overdrive.

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