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Gas Tax Increase On the Way?

Posted: January 5, 2009 at 10:48 AM CST

Most motorists welcome the respite from high gas prices. The plummeting price of crude oil has lowered prices at the retail level significantly. One of the primary causes in this drop is the reduction in demand—people finally quit driving. Whether they couldn’t afford gas prices or simply chose not to pay them, a vast majority of people started using less fuel.

While the drop in gas prices is a welcome outcome, it’s also a problem for the government charged with building and maintaining roads, bridges and transit programs. Motorists buying less gasoline means a reduction in fuel taxes. Even before the drop in fuel tax revenue the government—both federal and local—had difficulty keeping up with the stresses put on our nation’s roadways.

Now a federal commission appears to be at least considering the possibility of increasing federal gas and diesel taxes. An Associated Press report said “a roughly 50 percent increase in gasoline and diesel fuel taxes is being urged by the commission until the government devises another way to pay for using public roads.” The report goes on to say that the commission, named the National Commission on Surface Transportation Infrastructure Financing, is expected to “urge Congress to raise the gas tax by 10 cents a gallon and the diesel tax by about 12 cents to 15 cents a gallon.”

It’s an interesting dilemma for Congress to be in. However, it’s not only the federal government that’s dealing with the situation. Oregon’s gas tax revenues are down $4.8 million per year compared with 2006, according to the Los Angeles Times. Gov. Ted Kulongoski has even taken the step of proposing a new highway tax based on miles driven, not per gallon of fuel purchased. It would require every new vehicle in the state to be fitted with a global positioning system device to record every mile driven. “Motorists would pay at the gas pump based on how much they drove, no matter how fuel-frugal their vehicle,” the Times said.

Obviously, there are a lot of questions to be answered by Kulongoski’s plan. There are a lot of questions the federal government needs to answer as well in terms of gas tax revenues. It’s just another reason 2009 should be an interesting year.

-Dave Nilles