The proposed gas tax holiday has officially been scrapped.
Of course, this shouldn’t be news – the tax holiday was planned to start on Memorial Day as the kick off to the summer holiday season. Considering that we’re about six weeks away from Labor Day (the proposed end), the idea that the holiday won’t happen this summer shouldn’t surprise anyone.
According to Forbes, the reason that the holiday was shelved has everything to do with the same reason that the tax was proposed in the first place: the economy. Apparently it took Congress quite awhile to figure out what my readers already knew, that a decrease in tax revenue without a corresponding cut in spending would result in lost jobs.
The chair of the House Transportation and Infrastructure Committee, Rep. James Oberstar (D-MN), and the chair of the highway subcommittee, Rep. Peter DeFazio (D-OR), presented a report to Congress illustrating how many jobs were at risk. It ranged from 1,000 jobs in Vermont to 23,000 jobs in California. In an election year, that is a particularly tough pill to swallow.
But it’s even worse than we thought. The highway trust fund, which pays for highway and bridge projects, is losing money. Three years ago, the trust fund had a surplus of $10 billion. The trust fund is now predicted to reach a $3 billion deficit next year.
The Transportation Construction Coalition expressed concern that if Congress does not do something soon, further job losses would occur. Predictions run as high as 485,000 additional jobs at risk. Cutting projects is not an option because recent reports suggest crises in roads and bridges infrastructure that need to be addressed.
Congress hasn’t done anything to resolve the matter yet, largely because there is no clear agreement on how to replenish the trust fund. One suggestion? Raising the gas tax. Yes, I said raising the gas tax. Congressional officials note that federal fuel taxes have not changed in 15 years, not even indexed for inflation. Suggestions for an increase in the tax have ranged from 10 cents per gallon to 40 cents a gallon.
Alternatives to a gas tax increase are just as unpopular. They include the addition of toll roads and public-private partnerships, congestion pricing and user fees.
No matter which road we head down, gas is going to become much more expensive. Ugh.
