During House hearing, officials back fuel tax hike now, vehicle tax later
February 8, 2019
On Thursday, the House Transportation and Infrastructure committee held a hearing about infrastructure funding. Among the many recommendations, the most popular was increasing the fuel tax now and paving the way for a vehicle miles traveled tax. Other topics include under-21 CDL licensing and a tax specifically on freight.
On Thursday, Feb. 7, the House Transportation and Infrastructure committee held a hearing called “The Cost of Doing Nothing: Why Investing in Our Nation’s Infrastructure Cannot Wait.” Among the several witnesses former Transportation Secretary Ray LaHood and UPS Freight President Rich McArdle.
Although topics ranged from surface transportation to waterway infrastructure, the common theme during the hearing was the Highway Trust Fund and how to keep it afloat.
“We’ve kicked this can down the road so many times already, pretty soon we’re going to kick it right off the map,” ranking member Sam Graves, R-Mo., said.
Fuel tax increase
During opening statements committee Chairman Peter DeFazio, D-Ore., noted that the nation has an investment gap of $2 trillion over 10 years. Addressing the issue, three bills have been proposed. One of those bills, dubbed “A Penny for Progress,” will provide approximately $500 billion for infrastructure by indexing the gas and diesel tax and bonding off the indexation revenues and bringing those revenues forward.
Delegate Eleanor Holmes Norton, D-D.C., pointed out that the “elephant in the room,” the federal fuel tax, has not changed since 1993.
On behalf of the Chamber of Commerce, McArdle reminded the committee that the Chamber recommended a fuel tax increase of 5 cents a year for the next five years. Indexed for inflation, the proposal would generate $394 billion over the next 10 years.
“To rebuild and expand our roads, bridges, and transit systems, the Chamber believes it is time for a modest increase in the federal motor vehicle fuel user fee,” McArdle said.
Larry Willis, president of AFL-CIO’s transportation trades department, echoed that sentiment.
“We have long supported efforts for a modest increase in the federal gas tax, which remains the most efficient and reliable means to raise revenue for our surface transportation network,” Willis said. “Yes, an extra 25-cents-per-gallon at the pump will increase costs for some consumers by roughly $100 per-year. But this calculation overlooks the fact that investing in American infrastructure will raise household income, by a recent estimate, to the tune of $1,400 per-year.”
VMT tax in the future?
Although most agreed about a fuel tax increase, the conversation quickly turned to a vehicle miles traveled tax, VMT tax, when discussing long-term solutions.
“I don’t know that a gas tax is bold, because quite frankly it’s a short-term solution,” Rep. Mark Meadows, R-N.C., said. “We all know it.”
Graves said the only viable future is a transition to a VMT tax. LaHood agreed.
“However, when it comes to the gas tax, it is clear that as a long-term solution it is not a sustainable source of revenue and other options must be further explored and tested,” LaHood said. “A number of states – most notably Oregon, California, Colorado and Washington – have moved forward with pilot programs to test the feasibility of replacing the gas tax with a charge based on the mileage.”
Most agreed that part of the problem with a long-term reliance on fuel taxes is increased fuel efficiency of vehicles. Replacing a fuel tax with a VMT tax may solve that problem.
“There is a dispute about the gas tax,” Rep. Don Young, R-Alaska, said. “I’m a big supporter of the gas tax, but I’m also a supporter of a mileage fee. We have about 3 million electric cars on the highway today not paying their share.”
Los Angeles Mayor Eric Garcetti recommended increasing the gas tax now, launching a national VMT pilot program and gradually weaning off fuel taxes and transitioning to a VMT.
The issue of congestion was also discussed. McArdle noted that congestion on the interstate highway system alone costs the trucking industry nearly $74.5 billion in 2016 and wasted more than 1.2 billion hours. That equals 425,000 drivers sitting idle for a full working year.
“Practically speaking, this means that every day we have to dispatch more tractor-trailers and delivery vehicles than necessary to complete our work under optimum conditions – therefore, and ironically, adding to congestion,” McArdle said.
Expanding on that, Willis explained the situation truck drivers go through at the Port of Virginia.
“Surges in containers from increasingly large ships regularly put the port over capacity, creating traffic jams that can be 13-lanes wide, 10-trucks deep, and take eight hours to clear,” Willis said. “Port congestion not only means truck drivers lose out on pay, lessening their purchasing power and placing a strain on their communities, but it means the shipment of goods and raw materials to retailers, small businesses, and farmers is severely delayed.”
Rep. Abby Finkenauer, D-Iowa, brought up workforce shortages and development. McArdle addressed her concerns by bringing up the age requirement to obtain a CDL. He noted that there should be a way to license drivers under 21-years-old. One idea was having qualified trainers with tow or three years’ experience to mentor younger employees to get them in the driver’s seat.
Rep. Lloyd Smucker, R-Pa., asked McArdle about a proposed highway transportation tax, which is essentially a tax on freight. Although McArdle was not familiar with the idea, he did state his radar goes up with any proposal that targets freight.
Even the NIMBY crowd was mentioned during the hours-long hearing. Mayor Garcetti talked about the issues with project permits, including residents slowing down the process, a situation truck stop companies often run into.
“We all want the truly environmental protections to be there, but what now is called ‘environmental law’ is so often a way for people who are NIMBYs to slow things down,” Garcetti said. “Full stop.”