Green Taxes

[TheMercenary]

MARCH 4, 2009

Raising the Federal Gas Tax Is a No-Go

Transportation Secretary Ray LaHood rejected increasing the gasoline tax to fix a worsening shortfall in funding for highways and mass-transit systems, saying the government should instead turn to ideas such as private investment and new tolls to raise money.

Mr. LaHood, a former Republican congressman from Illinois, said that even with $48 billion for transportation projects included in the economic stimulus bill, states would be forced to slash spending and construction jobs this year unless new funds emerge. Less money is available for such projects because the main revenue sources -- taxes on gasoline and vehicle purchases -- are declining amid a cutback in driving, a shift to fuel-efficient cars and slumping auto sales.

Last year, Congress transferred $8 billion into the Highway Trust Fund -- the federal mechanism that channels fuel taxes into transportation projects -- to ease the crunch. Mr. LaHood said Congress will face the same dilemma this year and beyond until a permanent fix is found.

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Transportation Spending by StateMr. LaHood dismissed the idea of raising the 18.4-cent federal tax on a gallon of gasoline, which hasn't changed since 1993. Last week a congressionally chartered commission said Congress should consider raising the rate this year as it fashions a multiyear transportation bill that could cost $500 billion. The commission said the U.S. faces a $68 billion annual funding gap if nothing changes.

"If you talked to the people who served on this commission, they will tell you, rightly so, there is not enough money in the Highway Trust Fund to do what we want to do," Mr. LaHood said. "With the economy the way it is right now, trying to propose a 10-cent-a-gallon increase in the gasoline tax is not going to fly anywhere in America, including Washington, D.C."

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http://online.wsj.com/article/SB123611793346923071.html