Can We expect Higher Gas Taxes Now with Lower Gas Prices?

Lawmakers, Treading Cautiously, Push for Increased Levies to Repair Highways, Boost Economies

The sharp drop in gasoline prices over the past few months is providing a rare political opening for state and federal officials who want to raise gasoline taxes to repair highways and boost construction jobs.

In Iowa, Republican Gov. Terry Branstad is gauging lawmakers’ support for the first state gas-tax increase since 1989, among other options to raise transportation funds. In Michigan, the GOP-controlled legislature approved a plan last month for a ballot initiative to boost the gas tax for road repairs. In Utah, Republican leaders in the state House signaled this week they are moving to raise the gas tax to cover a transportation-funding shortfall.

Lower gasoline prices may have given lawmakers a 
window to raise gas taxes to fund repairs of aging 
infrastructure.  Bloomberg News

In the nation’s capital, several top Senate Republicans—supported by some Democrats—are signaling an openness to raising the federal levy from the 18.4 cents a gallon it’s been at since 1993. The backers include business groups and corporate leaders who want to see infrastructure improvements and jobs-minded unions.

The emerging push is taking lawmakers into two issues that can spark a backlash from voters: gas prices and taxes.

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A 2013 poll by research firm Gallup—taken while gas costs were high—showed two-thirds of Americans oppose raising state gas taxes by up to 20 cents to fund infrastructure projects. But the sharp drop in gasoline prices—to less than $2 a gallon at more than a third of U.S. stations—is brightening consumers’ moods, potentially taking the edge off raising state taxes that total as much as 50 cents a gallon on top of the federal tax of 18.4 cents.

Elected officials from both parties are treading into the debate cautiously, framing the issue around improving highway safety and local economies by repairing a growing backlog of troubled roads and bridges. Their hurdle: Lawmakers who support higher fuel levies risk being blamed for the burden of high prices.

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“There aren’t many products where every time you go for a drive you see the price thrown at you a dozen times before you get to your destination,” said Carl Davis, a senior policy analyst at the Institute on Taxation and Economic Policy, a nonprofit research group in Washington. “Gasoline is something people buy frequently. It’s a significant expense for people.”

Republicans in some states have couched proposals to raise state gas taxes as “user fees.” In Iowa, Mr. Branstad has asked his transportation director to propose options to raise road funds, including increases in the gas tax and vehicle registration fees. Mr. Branstad met with legislative leaders Wednesday to gauge support for the measures, his spokesman said.

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