Buttigieg suggests gas tax hike to shore up Highway Trust Fund, including tax-per-mile option

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WASHINGTON, DC – President Biden’s nominee for Transportation Secretary raised eyebrows during his confirmation hearing Thursday by suggesting a gas tax hike was on the table to pay for federal highway programs. A spokesman later walked back the claim.

Former South Bend, Indiana Mayor and failed 2020 presidential primary candidate Pete Buttigieg made the suggestion while testifying before the Senate Commerce, Science, and Transportation Committee.

Sen. Rick Scott (R-FL) asked Buttigieg during the hearing if he would support increasing gas taxes to support the Highway Trust Fund, and if so, how much he thought it should be increased.

Buttigieg answered:

“I think all options need to be on the table. As you know, the gas tax has not been increased since 1993 and it has never been pegged to inflation. That’s one of the reasons why the current state of the highway trust fund is that there is more going out than coming in.”

The federal gasoline tax is presently 18.4 cents per gallon. The tax is the primary funding source for the Highway Trust Fund, which was established to maintain federal highways and local mass transit projects.

The Congressional Budget Office projects that by 2030, spending will exceed reserved of the fund by $134 billion in highway funds and $54 billion in mass transit funds.

Buttigieg said that in the past, Congress had used general fund transfers to maintain the fund, but did not know if Congress would continue with that approach going forward. He said that the tax could be a “near-term” solution to the fund deficit but admitted the tax may not be effective in the long run:

“In the long term, we need to bear in mind also that as vehicles become more efficient and as we pursue electrification, sooner or later there will be questions about whether the gas tax can be effective at all.”

When pressed by Sen. Scott about what he would recommend, Buttigieg suggested a user-based system. He described the user-based option as a tax based on how many miles a person drove:

“Part of how you might do that would be based on vehicle miles traveled, but that raises, of course, concerns about privacy and there remain some technological questions.”

Buttigieg clarified that the user-based suggestion is just one example of how a solution could be found to the funding shortage. He said a solution would only be found after conversations inside the administration and with Congress.

Sen. Scott later reacted to the gas tax increase suggestion in a Twitter post:

“Yesterday, USDOT nominee Pete Buttigieg said he’s open to raising the gas tax on the American people to pay for government’s wasteful spending. There is absolutely NO reason we should be placing that burden on taxpayers.”

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Later in the hearing, Sen. Mike Lee (R-UT) asked Buttigieg again if he would raise the gas tax to make the fund solvent. This time, Buttigieg said not only was the tax increase a solution being discussed but a possibility:

“Well, it’s possible. Certainly, many states have taken that step…I think there’s a recognition that we don’t have adequate national resources going into roads and highways, and that we need to look at any responsible, viable revenue mechanism we can all agree on to do something about that.”

Sen. Lee pushed back against the suggestion of a gas tax hike during the hearing:

“It’s my view that we ought to be looking at a lot of other options before — or instead of — getting to that one.”

Sen. Lee mentioned that Utah has increased its gas tax in the past, and through that experience, he “worried” about the idea of raising the tax:

“It seems to me that it is a pretty regressive tax, one that disproportionally affects poor Americans.”

Sen. Lee asked if there were cost-saving measures that Buttigieg would consider before a tax hike. Buttigieg said he would look for ways to streamline and prioritize the fund to create cost-savings:

“Any government enterprise needs to run as efficiently as possible. These are taxpayer dollars, and we’ve got to make sure that we are streamlined and delivering as much as possible toward the actual intent.

“It was a focus of mine when I was mayor to make sure that we didn’t have any duplicative or outdated things that were adding to the cost of delivery. That’s certainly something I want to look into here as well.”

A spokesman for Buttigieg later walked back his statements, telling reporters that the gas tax increase was not on the table:

 “A variety of options need to be on the table to ensure we can invest in our highways and create jobs but increasing the gas tax is not among them.”

Other elected officials reacted to any suggestion of a gasoline tax hike as a nonstarter. Georgia Rep. Marjorie Taylor Greene tweeted:

“I oppose a gas tax hike. This would hurt lower- and middle-income Americans the most. And increase costs for small businesses that are already getting crushed by Democrat shutdowns. Biden and his Socialist gang breaking campaign ‘promises’ from the get-go.”

A gas tax hike during the pandemic, and at a time when the United States economy is in a downturn not seen since the great depression, there does not seem to be much appetite in Washington DC for a tax hike. However, some states are looking at the option.

For example, a proposal was submitted by state House Democrats to increase the state gas tax by 18 cents over two years. This would make Washington State the highest gas taxed state in the nation. Motorists currently pay 49.4 cents per gallon in state taxes and an additional 18.4% in federal taxes. 

The proposed bill would increase the price by 10 cents a gallon this year, and another eight cents in 2022, bringing the total in state taxes to 67.4 cents a gallon.

 

 

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