Top Reasons Congress Should Reject a Gas Tax Hike

Congress created the Highway Trust Fund (HTF) in 1956 to fund construction of the Interstate Highway System. The HTF is funded primarily though an 18.4-cent per gallon federal excise tax on gasoline. Funding for the HTF expires May 31, and with the HTF facing a budget shortfall, some in Congress have proposed raising the federal gasoline tax. Below are 6 reasons why Congress should reject any attempt to hike gasoline taxes to pay for the HTF.

1. The federal gas tax has outlived its usefulness. Congress originally created the gas tax in 1956 to fund the Interstate Highway System, which was completed decades ago. At the time it made sense to build an interstate highway system using federal funds because the highways, by definition, ran from state to state, sea to sea, border to border. But now that the interstate highways are built, there is much less of a need for the federal government to be involved because infrastructure needs are much more local rather than interstate in nature. Therefore, the primary responsibility for infrastructure development should be left to states and the private sector.

2. The HTF has a spending problem, not a revenue problem. More than 25 percent of HTF revenues are not spent on highways, but are diverted to subways, streetcars, buses, nature paths, and even squirrel sanctuaries. Instead of raising the gas tax, the federal government should rein in its wasteful non-highway spending. This would help close the HTF’s budget shortfall without raising taxes. Congress should not bail out the HTF on the backs of the American people.

3. Gas tax hike negates the benefits of affordable gasoline, hurts the poor. American families are expected to save more than $550 this year due to lower gas prices. Raising the federal gas tax would eat into those benefits, with low-income families getting hit the hardest. The bottom line: there is never a good time to raise taxes on the American people to fund a broken system in which the federal government no longer has business being involved.

4. Federal money comes with federal strings. The HTF requires states to send federal gas taxes to Washington and the federal government returns some of that revenue with strings attached. This allows the federal government to coerce states into enacting policies they may otherwise disagree with. For example, the reason that states increased the drinking age to 21-years-old was because the federal government required a 21-year old drinking age or the federal government would withhold some gas tax funding. Today, highway projects funded with federal dollars must meet federal requirements under the National Environmental Policy Act (NEPA) and the Davis-Bacon Act on prevailing wages, among others. States should not accept these strings for money that was theirs to begin with.

5. The federal gas tax needlessly redistributes revenues. There is no need for the federal government to redistribute gasoline taxes other than as a tool to control states. States are better equipped than the federal government to meet the local needs of their residents. Gasoline taxes should stay in the state in which they were raised, and they should be used for roads, their intended purpose.

6. Let states be laboratories of democracy. There is no need to raise the federal gas tax—states already tax gasoline. Decisions over transportation funding are best made at the local level between states and the private sector. In recent years, some states have decided to raise their gas tax while others have not. Leaving these decisions to states and private partners encourages innovation and discourages the waste and abuse we’ve seen at the federal level.