TAX FILE: New highway taxes escape federal budget

The President's budget includes a variety of dramatic tax proposals (see “The Bottom Line,” this issue). But the budget is also noteworthy for something it omits: There are no proposals to increase highway taxes. Highway spending would go up slowly, thanks to a more rapid spend-down of the balance in the Highway Trust Fund and transfer to the Fund's Highway Account of the 2.5¢ tax on gasohol that is now in the general fund.

Congress is likely to adopt the gasohol and spend-down proposals. The committees that will write the spending side of the next highway reauthorization bill this year are eager to put much more spending into it. Their challenge will be to come up with additional funding sources that the tax-writing committees — and the President — will approve.