It doesn’t feel like it, but Americans have been paying less and less of one particular tax since 1993, and that trend will continue in the coming years. Members of Congress know they need to react to what is happening. They just don’t know how.
I’m talking about the federal gasoline tax, which was set at 18.4 cents per gallon in 1993 and has not been increased or indexed to inflation. Arkansas adds an additional 21.5 cents for state needs.
Traditionally, the tax – along with taxes on other fuels such as diesel – has allowed the nation’s highway system to be financed by drivers. Most in Washington like the concept that a government service should be funded by those who benefit from it, but now those taxes are falling short. In the past four years, $35 billion came from elsewhere to make up a shortage in fuel taxes, and since the government didn’t have that money to begin with, it’s been contributing to the debt the country is passing on to the next generation.
Why is this happening? Well, 18.4 cents in 2012 is not what it was in 1993, and it certainly doesn’t pay for the rising costs of certain road materials, such as asphalt, of which petroleum is a primary ingredient.
But there’s another problem, and here’s where that tax cut I mentioned in the first paragraph comes in: Cars are becoming more fuel-efficient, which means they are using fewer gallons of gas to go the same distance. Fewer gallons means less tax revenues to pay for roads.
There’s a fairness issue, too. Folks who can buy a new Toyota Prius, which gets about 50 miles per gallon, are paying less for a stretch of pavement than the guy who works on the factory floor and is making do with the gas-guzzling 1987 Buick he keeps running with duct tape and prayer. Drivers who can afford an electric car (cost of a new Nissan Leaf: $35,000) get their highways virtually for free, as do those driving vehicles powered by natural gas.
Granted, legislators may want to continue letting that happen, because cars powered by electricity and natural gas are cleaner and use fuel from home-grown energy sources. Not taxing them encourages more to be produced, which would be great, particularly for natural gas-rich Arkansas.
But it doesn’t tell us how we’re going to pay for all these roads.
This is one of those issues that doesn’t have an easy answer, so members of Congress understandably have put off asking the question. Raising the gas tax at a time when drivers already are mad about high prices at the pump is seen as political suicide, so nobody wants to do that. Moreover, many Republican members of Congress, including all of Arkansas’, have signed a pledge not to increase taxes without finding an offset somewhere else. That’s hard to do when the government already is borrowing 42 cents of every dollar it spends.
As in other areas of our national life, Americans are getting more government than they are paying for, so choices have to be made.
One part of the solution is creating a more efficient highway funding system, which Congress’ recently passed highway bill does by reducing bureaucratic waste such as unnecessary environmental reviews. It also encourages public-private partnerships, which means big contractors rather than big government would be responsible for building and maintaining some highway miles. More roads of the future might be funded through tolls, which are not as efficient as taxes, but public-private partnerships also might unlock more creative solutions, such as more lanes available only to carpoolers.
That’s probably not going to be enough, however, especially as fuel-saving technology spreads, so Americans will be left with the choice we don’t like: some combination of more revenues and less spending. Drivers of alternative fuel vehicles eventually must pay for highways just like the rest of us do, and all of us will have to pay more through some kind of funding mechanism that keeps up with costs.
Meanwhile, the country might have to build fewer new roads. Maybe we’ll have to take care of what we have, build only where absolutely necessary, and accept that if we don’t want to pay for our mobile society, we’ll have to be a little less mobile. We might have to ride a bus every once in a while, for goodness’ sakes. Or get used to sitting in traffic more often.
Regardless, we can’t keep building more roads and cutting taxes at the same time. The government spending more than it collects – that can’t happen indefinitely, can it?
Steve Brawner is an independent journalist in Arkansas. His blog — Independent Arkansas — is linked at arkansasnews.com. His e-mail address is firstname.lastname@example.org