July 24, 2018

Shuster draft calls for 20-cent hike in diesel taxes over 3 years

All motor fuel taxes to end in September 2028; pilot to test replacing fuels tax with levies on vehicle miles traveled.

By DC Velocity Staff

A draft document published late yesterday by the outgoing chairman of the House Transportation and Infrastructure Committee to fund infrastructure projects would phase in user fee increases on diesel fuel consumption by 20 cents a gallon over the next three years but would eliminate all motor fuels taxes on Sept. 30, 2028.

The document, released by Rep. Bill Shuster (R-Pa.), would establish a pilot program to determine if funding based on the number of miles that vehicles travel can replace the motor fuels tax as the primary source of revenue for the troubled Highway Trust Fund. The program would seek participating volunteers from either the trucking or motoring side, with the pilot administered by the Secretaries of Transportation and Treasury.

Federal diesel fuel taxes stand at 24.4 cents a gallon, and have not been raised since 1993. Most states have raised diesel and gasoline taxes multiple times over the past 25 years. Broad-based industry support has long existed to increase motor fuels taxes. The U.S. Chamber of Commerce, the nation's largest business trade group, has proposed a 25-cent-a-gallon increaseto be phased in over five years or done all at once. The Chamber said the increase, which would be indexed to inflation and improvements in fuel economy, would raise about $394 billion over 10 years for the Trust Fund.

Ed Mortimer, the Chamber's vice president for transportation infrastructure, applauded Shuster's actions, saying today that his plan "echoes many of those priorities" that the group has already outlined.

The Shuster draft calls for the creation of a commission to suggest ways to maintain the Trust Fund's solvency, and to report its recommendations to Congress. For a number of years, the Trust Fund has required substantial capital infusions from the general treasury to keep its head above water. Trust Fund receipts over the past decade due to the severe recession in 2008-09, the slow multi-year recovery, and the advent of more fuel-efficient vehicles operate longer distances without consuming either diesel or gasoline.

The document also re-authorizes the Trust Fund through September 30, 2021.

Shuster, who will retire when his term expires in January 2019, said the draft is meant to stimulate discussion among fellow members, and is not designed to take the form of legislation. Shuster said in a statement that he was frustrated that Congress has done little, if anything, to fashion infrastructure legislation. The Trump administration has seemingly put the issue on the back burner as well.

The White House proposed a broad infrastructure initiative that would cost $1.5 trillion over 10 years. Of that amount, $200 billion would be directly funded by the federal government and would qualify as "seed" capital. The remaining $1.3 trillion would come from investments by states, localities, public-private sector partnerships, and money from budget savings elsewhere in the federal government. The proposal has been silent on funding mechanisms, and critics in and out of Congress contend the $1.3 trillion figure is far too daunting for entities outside the federal government to consider.

Shuster warned in February that if Congress fails to pass a bill by the end of 2018, progress will likely stall out in 2019, and then face the run-up to the 2020 general election when little of legislative significance would get done.


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