Freight interests back legislation to boost fuel taxes 15 percent over three years

Trucking, shipper, and intermodal interests have all thrown their support behind legislation calling for a 15 cent-a-gallon increase in the nation's motor fuel tax to be phased in over a three-year period. The bill also proposes that the tax be indexed for inflation.

Introduced yesterday by Rep. Earl Blumenauer (D-Ore.), the "Update, Promote, and Develop America's Transportation Essentials (UPDATE) Act" would raise about $170 billion in revenues over the next 10 years, supporters said. Federal taxes on motor and diesel fuels have not been increased since 1993; the current tax on diesel stands at 22.4 cents a gallon. Fuel taxes are the primary source of funding the nation's road infrastructure programs.

The bill includes a "sense of Congress" resolution to identify ways to replace the fuel tax with a more durable mechanism to pay for road programs. Fuel tax receipts have lagged behind spending needs for years, forcing Congress to transfer billions of dollars from general funds into a depleted Highway Trust Fund. Fuel tax receipts are predicted to decline further in coming years as motor vehicles of all types become more fuel-efficient and can travel longer distances between fill-ups.

Various interest groups have lobbied for years to raise the nation's fuel tax as long as the revenues are dedicated to highway and transit programs. However, both the Bush and Obama administrations have ruled out fuel tax increases, calling them regressive levies. Congress has also refused to take any action. Those positions were hardened in the wake of the financial crisis and the subsequent recession.

Even today, few believe the White House could be persuaded to support a fuel tax hike. Pushing Democratic-sponsored legislation through a Republican-controlled House would make the task even harder.

In a statement, Blumenauer said it is time for federal lawmakers to pick up the baton. "There's a broad and persuasive coalition that stands ready to support Congress, including the U.S. Chamber of Commerce, [the] AFL-CIO, the construction and trucking industry, cyclists, professional groups, numerous associations of small and medium businesses, local governments, and transit agencies," he said. "We just need to give them something to support."

Bruce Carlton, head of the shipper group National Industrial Transportation League (NIT League), said his members "would have no problem" with the legislation's proposed tax increase. NIT League members have long advocated a fuel tax hike.

"For years, the trucking industry has been urging someone to put a fuel tax increase on the table, and Congressman Blumenauer's bill does just that," said Phil Byrd, chairman of the American Trucking Associations and president of Bulldog Hiway Express, a Charleston, S.C.-based carrier, in a statement.

"Not precluding other potentially viable revenue sources, we see the proposed increase in the federal gasoline and diesel fuel taxes as a crucial step in the right direction and believe the consequences of inaction in addressing the transportation funding crisis are serious," said Leslie Blakey, executive director of the Coalition for America's Gateways and Trade Corridors, a public-private sector coalition representing intermodal interests.

NIT League's Carlton cautioned that any tax increase would be a tough sell amidst a still-fragile economic recovery. What's more, it could become a political hot potato with the midterm Congressional elections less than a year away. "This one will need a lot of political cover," he said.

The U.S. Chamber of Commerce, which has three million members representing a vast range of interests, had not issued a statement at press time. Janet F. Kavinoky, the Chamber's point person on freight issues, was unavailable for comment. The Chamber has gone on record supporting an increase in fuel taxes.