The American Transportation Research Institute has determined that a federal fuel tax increase is the best option for achieving a large-scale infrastructure program.
ATRI released its “Framework for Infrastructure Funding” on Nov. 8. The research found that other methods of generating revenue, such as mileage-based user fees and increased tolling systems, will fall short of the funds needed to invest in transportation.
Repairing infrastructure was one of the pillars on which President Donald Trump built his campaign. The specifics of his $1 trillion infrastructure plan have yet to be revealed.
In addition to creating new federal funds, a federal fuel tax increase will also galvanize states to produce matching funds, ATRI found. ATRI’s study indicates that every state would experience significant employment gains with a 10-cent or 20-cent federal fuel tax increase. The report says a 20-cent fuel tax increase would yield nearly 500,000 new jobs, and states would bring in between $15 billion and $30 billion annually.
“Maybe the most important and unexpected benefit of a federal fuel tax increase is the hundreds of thousands of new, high-paying construction jobs that will be produced,” said Dennis Dellinger, president of Cargo Transporters. “We often assume that the only reason to raise the fuel tax is to lay more asphalt and concrete. Forgotten in the mix is that tax revenues can simultaneously produce good roads and good jobs.”
The federal fuel tax has not been increased in over 20 years. ATRI’s research cautions against the “do-nothing” approach because it can lead to significant costs for people who use the road. For example, although the trucking industry contributes $18 billion in federal user fees every year, increased congestion on the nation’s highways costs the industry more than $63 billion annually. ATRI’s report suggests that e-commerce will stagnate as freight deliveries fall short of consumer demands.
Another funding mechanism ATRI identifies in the report is a federal vehicle registration fee, which could offset the costs of electric vehicle use. Electric vehicles present a “tax revenue challenge” because they do not pay fuel taxes, the report said.
The report also discusses a vehicle miles traveled tax on the more than 250 million vehicles registered in the United States. This method would require tracking devices in each registered vehicle and oversight from the Internal Revenue Service, according to ATRI.
“ATRI’s research corroborates what many of us have espoused in Washington, D.C., and in every state capital: people are demanding action on transportation investment and the federal fuel tax is the ideal tool for delivering the much-needed funding,” American Trucking Associations President Chris Spear said.
The nation’s highways earned a D on the American Society of Civil Engineers’ 2017 infrastructure report card.