Gas Tax Increase Could End Low Gas Prices: 12 Cent Per Gallon Increase Proposed By Senate

With gas prices at their lowest point in years, many commuters are giving a sigh of relief. However, the low prices may not last long as the Senate is now proposing a gas tax increase that would be used to help fill the void in the federal highway fund. The proposed increase would add 12 cents per gallon to the price, regardless of the price at the pump.

CNN Money reports that incoming Republican leader of the Senate Transportation Committee, Senator John Thune of South Dakota, said Sunday an increase is up for consideration that would help replenish and stabilize the federal highway fund. According to Thune, the highway fund is looking at “about a $100 billion shortfall.” Therefore, the senate must look at all available options, including a proposed 12 cents per gallon gas tax increase.

The federal gas tax currently sits at 18.4 cents per gallon. If the proposal is passed, the tax would be increased to 30.4 cents per gallon. This is addition to state gas taxes which range from 50.6 cents per gallon in New York to just 8 cents per gallon in Alaska according to The Tax Foundation. Unlike sales tax, gas tax is a flat fee and is not based on the sale price of gasoline. No matter how low gas prices dip, the federal and state gas taxes remain the same. Therefore, the tax percentage fluctuates significantly with changing gas prices.

The gas tax increase proposal is seeing support from both republicans and democrats. In fact, the gas tax increase was proposed by Republican Senator Bob Corker and Democratic Senator Chris Murphy. As justification for the increase, the feds claim that the gas tax rate has not increased since 1993. The 18.4 cents in tax per gallon of gasoline has remained constant while the cost of highway repairs and inflation have climbed.

However, those opposed to the legislation note that the senators are not taking into account the increase in the number of drivers on the road or consumption. Though the gas tax itself has not increased since 1993, consumption and number of drivers on the road has increased significantly. Therefore, tax revenue from the gas tax has seen a steady increase over the years. According to the number of drivers on the road has steadily increased over the years. From 1993 to 2012, over 34 million more drivers were on the road. With this steady increases each year, the feds have collected tax revenue on the millions of extra vehicles; therefore, is the gas tax increase really needed?

Speaking of government budget shortfalls and solutions, NASA recently spent $349 million on a tower that they knew would never be used. The tower closed the day it was finished. Now tax payers must pay $700,000 a year to maintain the unused structure each year. The obscene amount of money spent on this single pork barrel spending project shows exactly how much waste happens within the federal government. Perhaps if the government took a closer look at projects such as the unneeded NASA tower, they would be able to easily secure the $100 billion for the federal highway fund without a gas tax increase.

What do you think? Should the senate consider the gas tax increase as a fix for the federal highway budget shortfall?