Federal Gas Tax Bills In 2014 Would Rise Over Time, But States Like California And Indiana Are Making Changes Now

A Federal gas tax being proposed in 2014 would add 12 cents to the gallon in every state but California and Indiana are already talking about implementing changes to their state gas taxes soon.

In a related report by The Inquisitr, some people were worried gas prices would be effected by the Iraq crisis but it turns out that China, and not the United States, has the larger investment in Iraqi oil even though the U.S. spent trillions on the Iraq war. This fact may surprise many Americans but it’s also not commonly known that United States oil production now beats even Saudi Arabia due to fracking operations. In fact, the growth rate in U.S. oil production outpaces the next nine fastest growing countries combined.

With all this wealth sitting underneath our feet, you would think politicians would figure out how to wisely manage the money. Unfortunately, the Federal Highway Trust Fund is running out of money and about 700,000 jobs are at risk because gas taxes are not keeping up with the government spending on paving roads, rebuilding bridges, and updating the transportation system.

Politicians are divided on the issue. Some suggest that the Federal gas tax should be lowered and that states should be responsible for maintaining infrastructure based upon the presumption that local governments would use the money more wisely. Democrat Representative Earl Blumenauer (D-OR) wants to increase the gas tax while President Obama wants to increase business taxes in order to resolve the shortfall in the Highway Trust Fund.

Now Senators Chris Murphy, a Connecticut Democrat, and Bob Corker, a Tennessee Republican, are proposing to create a new Federal gas tax that would not only go up to 12 cents by 2017 but would also keep increasing over time based upon inflation. Democratic Senator Tom Carper also proposed similar legislation while saying that short term solutions should not even be considered:

“The idea of simply doing this stop-and-go, stop-and-go stuff, that we’ve been guilty of for a number of years – it’s wasteful. We’ve got to stop doing it. We need to replenish the fund and then we need to get serious about six-year funding.”

In the past, the Congressional Budget Office (CBO) has estimated Congress would need to raise the gas tax by 10 to 15 cents. The only other option would be to slash spending by 30 to 65 percent.

But as of July 1, 2014, the state of California will have its gas taxes go down… sort of:

“In California, the excise gas tax will drop from $0.395 to $0.36 per gallon for the 2014-2015 fiscal year, ending June 30, 2015. The laws—referred to as the ‘fuel-tax swap’—re-engineered the sales and excise taxes on gasoline in a way that would divert more money into the state’s general fund at a time when it was running low. The swap lowered the state sales tax on gasoline, which funds local government, and is based on a percentage of price, to 2.25%. Then it required the excise tax, which pays for transportation infrastructure and is a flat rate, to be adjusted to make up the difference. The adjustment must be revenue neutral, meaning that the taxes customers pay at the pump would remain the same under the new laws as under the old tax structure.”

Unfortunately, the Indiana gas tax will actually be going up to 22.9 cents per gallon and may even fluctuate monthly:

“In Indiana, the state will be switching from a prepaid sales tax on gasoline, which was collected from retailers, to a gasoline-use tax based on a rolling monthly statewide average that is collected from distributors…. The new gasoline-use tax will be collected when a qualified distributor sells gasoline to a nonqualified distributor…. Retail stations should include the gasoline-use tax in the price at the pump and will be reimbursed in the same way as for other gasoline or special fuel taxes.”

Do you think the price for a state and federal gas tax should go up?