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June 12, 2014 11:20 AM, EDT

DeFazio Introduces Bill to Replace Gas Tax with Barrel Tax on Oil

 

WASHINGTON — Rep. Peter DeFazio (D-Ore.) has introduced a bill to replace the gasoline tax with a barrel tax on oil, eliminate the sales tax on truck tires, and index the diesel tax to inflation.

DeFazio unveiled his proposal at a “Rally For Roads” on June 11 on the National Mall, one of two gatherings here this week of labor, road builders and business groups pressing Congress to save the Highway Trust Fund.

The fund is expected to be insolvent by late July, and reimbursements to states may slow or stop work already under way. In addition, the current transportation spending law, MAP-21, expires Sept. 30.

The nation’s infrastructure is worn out, DeFazio told the crowd of about 300.

“You know better than I that America is falling apart, and we’re falling behind,” he said. “Most every other country in the world gets it; if you rebuild your infrastructure, or if you build a 21st Century infrastructure, you’re going to be able to compete in a global economy.”

At the rally, Sen. Barbara Boxer (D-Calif.) said Congress has known for years the trust fund is going broke so there’s no excuse for not acting to save it.

“We need a long-term solution,” said Boxer, chairwoman of the Environment and Public Works Committee, which in May presented a six-year transportation reauthorization plan.

She reiterated her choice to replace per-gallon fuel taxes with a wholesale fuel tax.

The 18.4-cent diesel tax and 24.4-cent gasoline tax generate the revenue for the trust fund, although some funding comes from the tax on truck tire and vehicle sales.

A day earlier, Transportation Secretary Anthony Foxx urged contractors at an annual gathering to support President Obama’s four-year, $302 billion plan to pay for roads and bridges via corporate tax reform.

“We shouldn’t be here talking about the fact that by August the Highway Trust Fund is going to be insolvent, that we’re going to lose 700,000 jobs . . . as a result,” Foxx said.

Meanwhile, DeFazio told Transport Topics that under his bill, introduced June 12, eliminating the excise tax on tires would save carriers an average $350 a year. And a tax of $6.75 on a barrel of crude oil, indexed to inflation and fuel-economy standards, would pump about $314 billion into the trust fund over 10 years, he said.

DeFazio said his plan for indexing the diesel tax to inflation and fuel-economy standards would take into account the inflation factor since the tax was last increased — in 1993.

The first year of the change would put the diesel tax at 26 cents a gallon, he said. After indexing for 10 years, the tax would be at about 47.4 cents a gallon, said DeFazio, whose plan calls for a six-year funding bill.

Senate Finance Committee Chairman Ron Wyden (D-Ore.) did not say he was supporting DeFazio’s plan, but he told the crowd at the rally that about 84% of the nation’s oil consumption is for transportation.

Wyden’s committee is tasked with finding funding for the six-year transportation bill EPW is advancing and also with finding a short-term fix for the trust fund.

“If you put the brakes on thousands of construction projects . . . that’s going to be a huge economic multiplier that hurts our country,” Wyden told the crowd.

Rep. Tom Petri (R-Wis.) told the rally that the money flowing into the trust fund is equal to only about 60% of what’s being drawn down for projects and that Congress has been only taking short-term measures to meet the problem.

“The time is fast approaching when we’re going to have to end that, get serious and pass a real surface-transportation reauthorization bill,” said Petri, chairman of the Subcommittee on Highways and Transit.

The only person at either event who called for increasing per-gallon fuel taxes was Rep. Earl Blumenauer (D-Ore.). He has introduced a bill to do so.

He said the best time to raise federal fuel taxes would be in the lamb-duck session after the November election when 10% of the Congress will be retiring or “somebody comes up with something better.”