Posted on August 01, 2011 1:50 PM
Federal Gas Tax Set to Expire
The current extension of the surface transportation authorization, SAFETEA-LU, isn’t the only component of national transportation policy set to expire at the end of this federal fiscal year. According to a Joint Committee on Taxation report, several federal Highway Trust Fund excise taxes will expire on September 30, 2011. These taxes include the following:
- All but 4.3 cents per gallon of the gasoline, diesel, kerosene, and alternative fuels taxes.
- Reduced rate of tax on partially exempt methanol or ethanol fuel.
- Tax on retail sale of heavy highway vehicles.
- Tax on heavy truck tires.
- Annual use tax on heavy highway vehicles.
(As a reminder, the U.S. Federal Highway Administration presents the following summary of federal highway user taxes. The federal gasoline tax is currently 18.4 cents per gallon.)
Although renewing the Highway Trust Fund excise taxes has typically been a routine affair, observers at Politico, DC.StreetsBlog, and the Council of State Governments question whether this case will be different. Given the continuing debate over the federal debt ceiling and surface transportation reauthorization bill, compromise may be harder to reach in time, as evidenced by the current Federal Aviation Administration partial shutdown.
An expiration of the federal gasoline and related taxes could have severe consequences on the region’s ability to maintain and modernize its transportation infrastructure. GO TO 2040 notes that the current federal and state gasoline taxes have not been raised in 20 years, and that growth in construction costs has far outstripped growth in gas tax revenues. As such, the plan recommends that the State of Illinois increase its rate by eight cents per gallon and index this rate to inflation.