Democrats and Republicans agree: It’s a perfect time for a gas tax hike

Noah Rothman Posted at 8:41 pm on January 08, 2015

You might have noticed the spectacular collapse of global crude oil prices reflected in the commensurate reduction of your weekly gasoline bill. Gas prices are lower, much lower, than they were just a few months ago. For Washington D.C., that represents an opportunity. Even for congressional Republicans, even a little bit more money in your wallet presents a chance to hike your taxes.

On Wednesday, the new GOP chairman of the Senate Environment and Public Works panel, Sen. James Inhofe (R-OK), said a hike in the gasoline tax is on the table as a means of paying into the Highway Trust Fund. As President Barack Obama would no doubt note, that fund is of vital importance for keeping the nation’s roads and bridge up to code.

“It’s not a tax,” Inhofe said. “It’s a user fee.”

Outside Beltway, that’s a distinction without a difference.

Inhofe’s embrace of a new, ahem, “user fee” for those who purchase the gasoline was shared by the new Senate Finance Committee Chairman Orrin Hatch (R-UT). “We’ll have to look at that. I’m looking at everything—every possible way of taking care of the highway bill,” Hatch echoed.

“I prefer not to increase taxes but to me that’s a user fee,” the retiring Utah senator added. “People who use the highways ought to pay for them. And that’s a small price to pay to have the best highway system in the world.”

Technically, a targeted user fee should be directed at people who use highways rather than purchase gasoline. Thousands of Americans rarely use highways. Thousands more purchase gasoline for use in home generators, lawn mowers, or other devices that have nothing to do with driving. These Republicans can apply whatever euphemism to a tax hike they would like, but they should at least make sure it is a convincing one.

More disturbingly, these ostensibly conservative lawmakers are essentially giving their imprimatur to a proposal endorsed by top Democratic lawmakers.

“Now’s the time do it,” Sen. Dick Durbin (D-IL) told reporters on Wednesday. “But we ought to do it in a thoughtful way.” He appeared to endorse some form of tax relief in order to offset the burden on low-and middle-income drivers.

“If there’s ever going to be an opportunity to raise the gas tax, the time when oil prices are so low is the time to do it,” House Minority Leader Rep. Nancy Pelosi (D-CA) concurred.

The Wall Street Journal provides some context for why lawmakers think this is a great time to hike consumption taxes:

With gasoline prices at lows not seen since 2009, some political observers and business executives say now is the ideal time to raise the 18.4 cent-a-gallon tax on gasoline and the 24.4 cent-a-gallon tax on diesel fuel, which haven’t increased since 1993. The taxes are the main source of revenue for the highway trust fund.

For commodities, however, that which comes down often must go up. The rapid collapse of oil prices is not a permanent feature of the global economy. Already, crude prices are again beginning to stabilize (the reaction to which prompted a 300 point Dow Jones Industrial Average spike on Thursday). If Republican lawmakers are going to spearhead a new tax on consumption, they had better move quickly before consumers notice.

U.S. Senate Commerce Committee Chairman Sen. John Thune (R-SD) told Politico that he is not entirely opposed to a new gas tax hike, but he added that the Republican Congress was not elected with a mandate to raise taxes. And that could complicate matters.

“The gas tax certainly would not be my preference. If we can find a better way to do it, and I think we probably can find a better way to do it, that’s what I’d like to see happen,” Thune told POLITICO. “Realistically, I don’t see a user fee increase passing this Congress. I think that’s a practical reality.”

“What’s not acceptable to me is continuing to do transfers out of the general fund and just put it on the debt and hand the bill to our children and grandchildren,” Thune added. “That’s not acceptable.”

Those voters. What frustrating impediments to progress.