Lawmakers Could Consider Gas Tax Hike, After Gas Tax Holiday Fails

The political vision of a summer gas tax holiday died a quick death in Congress, losing to a view that federal excise taxes on gasoline and diesel fuel — far from dropping — will have to go up if they go anywhere.

Despite calls from the presidential campaign trail for a Memorial Day-to-Labor Day tax freeze, lawmakers quickly concluded — with a prod from the construction industry — that having $9 billion less to spend on highways could create a pre-election specter of thousands of lost jobs.

Now, lawmakers quietly are talking about raising fuel taxes by a dime from the current 18.4 cents a gallon on gasoline and 24.3 cents on diesel fuel.

The fuel taxes go into the Highway Trust Fund, which is used for road construction and repair and mass transit. Depriving the 52-year-old Highway Trust Fund of $9 billion at a time when it is heading into the red doomed the notion of a gas tax holiday in Congress.

The nonpartisan National Surface Transportation Policy and Revenue Study Commission concluded in a report this year that the U.S. needs to spend $225 billion annually over the next 50 years to create a highway and transit system capable of sustaining strong economic growth. Current spending, at federal, state and local levels, is about $90 billion a year.

The American Road & Transportation Builders Association is calling for a 10-cent-a-gallon raise and indexing the tax to inflation.

With construction costs soaring because of competition for building materials from China and other developing nations, the tax rate would have to be about 29 cents a gallon to achieve the same purchasing power as the 18.4-cent rate imposed in 1993, the association says.

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