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Increased Gas Tax Off Table As Lawmakers Scramble For Highway Funds

Posted On: 7/11/2014

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TAGS: gas tax, vending route, coin machine route, fleet news, Highway Trust Fund, House Ways and Means Committee, U.S. highway infrastructure maintenance

WASHINGTON -- Government officials hoping for a bipartisan deal to finance the ailing Highway Trust Fund faced disappointment this week. The initial deal, which called for a 12¢ rise in the gasoline tax over two years, was shot down in the House. The increase in the tax would have been the first in more than 20 years.

A new proposal put forth by the House Ways and Means Committee calls for funding through a combination of nontax measures. It would institute an accounting practice called "pension smoothing," which allows employers to delay contributions to pension plans, thereby increasing taxable corporate income for the Treasury. Implementation of the practice is estimated to raise some $6.4 billion. An additional $3.5 billion would come from extending customs fees until 2024. Additionally, $1 billion would be transferred to the Highway Trust Fund from a separate fund created to clean up underground oil leaks. The revenue, according to experts, would be raised over 10 years to pay for a 10-month extension of funds for infrastructure projects across the country.

"This is the only package with a proven history of getting big bipartisan votes in both the House and Senate," said Dave Camp (R-MI), chairman of the House Ways and Means Committee. "And while it doesn't provide as much funding as I would like -- enough to get through the end of next year -- it does give Congress and the tax-writing committees ample time to consider a more long-term solution to the highway trust fund."

The particulars of the plan are likely to change as the deadline approaches, though a tax increase on fuel seems permanently shelved. The plan, which has come under fire from both sides of the aisle, may be the only one with a chance to pass. Should the Highway Trust Fund run out of cash, the result could mean the loss of an estimated 700,000 jobs, along with delays in much needed infrastructure projects.

The fund was established in 1956 to support America's Interstate Highway System. Financed by a gasoline tax set at 18.4¢ per gallon that is not indexed to inflation, the fund has run into trouble lately due to more fuel-efficient cars and trucks.