Federal Gas Tax Hike would Hurt Consumers and Encourage Overspending

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Posted by Justin Sykes on Thursday, May 14th, 2015, 1:50 PM PERMALINK

Just when American motorists thought it affordable to get back on the highways this summer, some Washington lawmakers are calling for massive increases to the federal gas tax. While there is currently a highway-funding gap, the answer is not to raise taxes but to reign in waste. Increasing the gas tax will not only worsen Washington’s spending problem, but will have American taxpayers picking up the tab.

Currently the federal gas tax is 18.4 cents per gallon and revenue from the tax goes into the Highway Trust Fund (HTF).  The HTF was originally created with the goal of financing and maintaining the nation’s highway systems. However in recent years HTF funds have increasingly been siphoned off to fund everything from bike paths to landscaping and -- most infamously -- squirrel sanctuaries.

Overspending on non-highway related projects has gotten so bad that spending of HTF funds is outpacing revenue from the gas tax. In fact the federal government spends roughly $50 billion annually while the gas tax only brings in around $34 billion each year. As a result, Congress has repeatedly had to add short term funding patches to maintain the HTF, with the most recent set to expire May 31st of this year.

With the looming May 31st deadline lawmakers are scrambling to find a solution, with some calling for an increase in the gas tax of up to 80%. One doesn’t have to be an economist to realize that the solution to overspending is not to increase the amount of money that politicians and bureaucrats have to overspend. Such a massive increase comes on the backs of taxpayers and avoids addressing the issue of overspending altogether.

Instead lawmakers should be looking to improve the fiscal responsibility with which HTF funds are spent, ensuring the funds go to what they were originally intended – the highways. For instance since 2008, federal spending on side projects has increased 38% while highway spending has remained flat. In fact using gas tax revenue to pay solely for highways would make the “HTF 98% solvent for the next decade” without increasing taxes.      

Additionally, increasing the gas tax would hit low to middle-income Americans the hardest. Most Americans are currently enjoying increased discretionary income each month due to historically low gas prices. When Americans have more to spend that extra income benefits the economy as a whole. Yet if some in Washington have their way that extra income would instead go to Uncle Sam where it would likely fund more wasteful spending on non-highway related projects.        

It’s clear there is a need for a solution to the inherent lack of fiscal responsibility in the way HTF funds are spent, a solution that doesn’t work to the benefit of government bureaucrats at the expense of American taxpayers. Thus it should also be clear to lawmakers that increasing the gas tax to pay for their fiscal transgressions is outrageously irresponsible, would reduce the discretionary income of millions of hardworking Americans and is simply not the answer. 

Photo Credit: Drew Stephens

Photo Credit: https://www.flickr.com/photos/dinomite/

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