DOT Secretary Opposes Fuel Tax Hike

Jan. 17, 2008
Historically, the US transportation system focused on building robust connections between various destination points and within cities, says a statement

Historically, the US transportation system focused on building robust connections between various destination points and within cities, says a statement by the DOT Secretary and commissioners Maria Cino and Rick Geddes. “The question of how to create efficient financing mechanisms for these systems is far less important when the test of success is how much highway or track mileage was added or rehabilitated in a given year,” they said. “Such an approach promotes relative indifference to the revenue mechanisms themselves so long as adequate revenue is generated. This is not a sustainable policy.”

Breaking with colleagues on the National Surface Transportation Policy and Revenue Study Commission, the Secretary, Cino, and Geddes said, “Because the Commission was not able to forge a consensus on the underlying nature of the problem facing our transportation system today, it should not be surprising that we were unable to reach agreement on a common set of solutions.”

The Commission recommended an increase of $0.25 to $0.40 per gallon in the federal fuel tax over the next five years with automatic increases each year after that. It assumes, along with increases in state and local transportation taxes, that the federal share of transportation funding would remain at 40% of total capital investments.

The public has overwhelmingly opposed increases in federal fuel taxes since 1993, say the dissenters, and this represents a “lack of investor confidence in the current transportation policy.”

“The public correctly understands that increased fuel taxes will not remedy the woefully inadequate transportation system performance they so frequently experience today.” The three transportation officials point out that neither Congress nor successive administrations have supported increases in fuel taxes despite the rapid deterioration of transportation system performance.

“Continued dependence on fuel taxes not only fails to align supply and demand properly, it is also inconsistent with national energy policy,” they continued. “A majority of our Commission colleagues propose to expand transportation capacity by increasing government taxation on a commodity whose consumption we seek to discourage.”

While the report is credited for recognizing the potential for road pricing to reduce congestion, “it does not recognize pricing as the essential element in a proper alignment of supply and demand as it is in almost every other major sector of our economy,” they noted. Road pricing is not just a demand management tool, they continued, it helps de-politicize investment decisions by sending clear signals where new capacity is most badly needed.

The group goes on to cite public-private partnerships as a key investment model.

There are points of agreement between the two sets of Commissioners. Both groups recognize the importance of the transportation system and the need for sustained investment. Opportunities for simplification, consolidation, and streamlining of federal programs are another. And a third is the need for greater accountability and rationality in investment decisions.

The Secretary's statement concludes with a call for fundamental changes in the way the system is built, maintained and operated and seeks an introduction of greater state responsibility and accountability, rational pricing and market discipline. Simply modifying historic methods of providing infrastructure, relying on increases in the federal fuel tax, and inviting political earmarking is a “recipe for the future that we, as a nation, can no longer afford,” they concluded.

Mike Jackson, CEO of AutoNation, the largest US car dealership group, reportedly supported an increase in the federal fuel tax, saying it would encourage consumers to opt for more fuel efficient vehicles.

Indiana Republican representatives Mark Souder and Mike Pence agreed that raising taxes was politically difficult and out of the question.

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