Why the Transportation Industry Supports the Potential Gas Tax

The past few weeks have brought rumors of a potential $0.25-per-gallon gas tax on the horizon. And while we don't have any official word from lawmakers yet, parties on both sides are weighing in.

In this Industry Focus: Energy segment, Transport Topics reporter Eugene Mulero explains who's arguing against the tax and why, what proponents have to say in its defense, and why the trucking and freight industries are pretty unanimously in support of a gas tax.

A full transcript follows the video.

This video was recorded on March 1, 2018.

Sarah Priestley: I actually wanted to ask you about two things. The first was the gas tax. I've seen a ton today, even in The Wall Street Journal. I think President Trump has proposed a $0.25 per gallon gas tax.

Eugene Mulero: Yes.

Priestley: And this is just a straight-on $0.25 tax. It's not an incremental amount at all. It doesn't seem to be going down too well, but I'm sure that people that read Transport Topics are very concerned.

Mulero: The $0.25, that's something at the White House has not commented on. Trump did not say this publicly. The White House is not denying it, either. The President had a meeting February 14th with the 10 top transportation policymakers on Capitol Hill. And one of the persons in that meeting, Senator Carper of Delaware, he hasn't said whether or not he had the green light from the White House, but after the meeting he told reporters that the President, several times, endorsed a $0.25 increase to the diesel and gas tax, which hasn't changed since 1993.

So, this morning, Carper was at this conference. You had other lawmakers who were at that meeting with the President who confirmed what the President said. We don't know exactly what the President has in mind, if he means $0.25 over 10 years, five years, an incremental increase. However, there is already pushback from these Republicans, especially the leadership. This guy, the Second in Command in the Senate, John Cornyn, is among them, the head of the transportation panel in the Senate, John Barrasso, who are opposed to a fuel tax increase for multiple reasons. One being, they call it a regressive tax. The argument is, because vehicles are so fuel efficient, we don't have a long-term viability for the fuel tax, we should be looking at other projects, other funding options like a vehicle miles traveled, etc.

Democrats, on the other hand, are applauding this. And if Trump actually comes out publicly and endorses a $0.25 gas tax, which is what the Chamber of Commerce, the American Society of Civil Engineers, the American Trucking Associations, the State Transportation officials, nearly all the governors, almost all of them really support this. Because while we are looking at a long-term funding system, funding option for infrastructure, right now, 95% of the vehicles on the road are fueled by gasoline. So, this would be the quickest way to come up with real, hard money to repair that bridge in Delaware, that road over in California.

Priestley: And what might that do to shipping companies or freight companies?

Mulero: Freight companies, the railroad industry, the trucking industry, cargo, air freight, near unanimous agreement that the fuel tax should be increased. They see it at the best, easiest way to repair the roads, to come up with the money to give it to the U.S. DoT. So, U.S. DoT, through a formula funding system, can give more money to South Carolina to improve their roads. So, the "poorer" states will get most -- that's how the federal government distributes their transportation dollars. So, you're able now to help the states that need the money the most to repair the systems.

If you privatize the corridors, what these freight companies argue is, that would lead to more tolling, and that would be a form of double taxation. Now, that could be a whole different debate that economists can have, whether or not it's a true form of double taxation. Nevertheless, if you take the perspective of, the trucking industry's argument is, aside from being a form of double taxation because we're already being taxed through the fuel tax, now they're paying a toll to use the same road that they're helping to pay --

Priestley: Already paying for.

Mulero: Yeah, exactly. Even if you have a tolling system like an E-ZPass concept, the industry argues that the psychology that a toll has on a driver is to automatically slow down. Even if you have a fast lane, tolling lane, where you can go 65 on that lane, most people still slow down when they go through tolls. For the trucking industry, slowing down means --

Priestley: Wasted time, wasted efficiency.

Mulero: Yeah, exactly. If you want to get some place in five hours, you add several tolls, you're now slowing down your truck.

Priestley: It's interesting. I'm sure some of our listeners will be surprised to hear that the trucking industry as a whole is pro this. But, obviously, I think, the potholes that they hit, the bad roads they encounter, that all damages the vehicle, and this all goes into the life cycle of the truck and things like that. Owner-operators may be more harder hit by this.