Two new bills propose increasing diesel fuel taxes    

The October 11 issue of Transport Topics reports on two bills introduced in the House proposing to raise the federal diesel tax to improve highways. Full Article A bill introduced by Rep. Laura Richardson (D-CA) would raise the tax by 12 cents per gallon with the money targeted for projects that are freight related. The second bill introduced by Rep Earl Blumenauer (D-OR) is revenue neutral and would replace the excise tax on new truck and trailer purchases with a 7.3 cent increase in the diesel fuel tax. The current federal excise tax is 12% on trucks, trailers and certain tractors.

Blumenauer's bill makes a lot of sense because truck and trailer purchases plummet in recessions and spike in expansions resulting in harmful volatility in the amount of money going into highway repair. Plus lowering the after tax cost of buying new equipment is a great idea at the present time. The ATA supports this bill as a means of stimulating the purchase of cleaner, safer and more efficient vehicles. This would not be "revenue neutral" to shippers who would see an immediate hike in fuel surcharges and only over time would see the offset from the lower cost of equipment purchases.

Richardson's bill is not a clear cut winner. In addition to the 12-cent increase in diesel taxes, the bill proposes to transfer $3 billion from the general fund to create a freight trust fund. That just takes money we have borrowed from China out of one U. S. government pocket and puts it into another. While the ATA also supports this bill, they are quick to point out that this bill is no substitute for a comprehensive new highway bill and will be insufficient on its own to address the infrastructure challenges we face today. The ATA suggests a similar increase in the gasoline tax to put additional resources towards highway and bridge construction and repair.

It is clear to anyone who drives that we need to boost highway infrastructure spending to make our industries more competitive and our commuting lives more sane. It is not as clear that with nearly 10% unemployment, fairly weak consumer spending, and abysmal housing starts and auto sales that we need to raise taxes and take money out of the tax payers' pocket and put it into the government's pocket. We need to pay more if we want more, but is now the right time?

Before we agree to any fuel tax increases we need two things in return. First, repeal the Davis-Bacon Act (prevailing wage law). This 1931 depression era legislation was designed to deprive blacks of good paying construction jobs. It has since become a sop to the unions that harms legal immigrants. Find your own favorite over-priced job and a window into mindless bureaucracy at Davis Bacon. Second, take highway spending prioritization out of congressional hands. For example, the Reason Foundation's Galvin Mobility Project scientifically studies congestion and proposes affordable and effective relief. Perhaps something modeled after the Defense Base Closure and Realignment Commission (BRAC) guided by scientific and mathematical models of congestion and disrepair is an option. We can't afford bridges to nowhere.