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Federal commission calls for upping fuel tax

Jan. 15, 2008
The National Surface Transportation Policy and Revenue Study Commission today proposed an annual five to eight percent increase in the nation’s fuel tax for the next five years

The National Surface Transportation Policy and Revenue Study Commission today proposed an annual five to eight percent increase in the nation’s fuel taxes for the next five years to fund urgent transportation repairs. The measure was passed by a nine to three vote, with Secretary of Transportation Mary Peters among the dissenters.

The commission was formed to conduct a two-year study of the current state of the transportation industry and analyze future needs for both the short and long term, as well as sources of revenue, either as a replacement or a supplement to the current fuel tax.

The commission’s report also focuses on transportation’s role in homeland security and national defense, including a reduction in our dependence on foreign oil.

Recommendations by the committee include an expansion of public transportation, increasing highway capacity to reduce congestion and embracing new safety strategies to cut traffic fatalities in half within 17 years. The commission also proposed budgeting $200 million annually to develop new energy sources.

Ken Simonson, chief economist for Associated General Contractors of America (AGC) told Fleet Owner that the report indicates the nation needs to significantly rebuild its infrastructure. “This report shows the magnitude of the problems ahead of us,” he said.

Simonson added that the report’s proposal would be very helpful in raising enough money to rebuild the nation’s infrastructure, depending on whether or not states also contribute additional funding.

AGC agrees with the report’s recommendation to create an independent National Surface Transportation Commission. “Congress should cede some of the decision-making to an independent, non-political group,” Simonson said.

The dissenting members, led by Secretary Peters, agreed that transportation reform is a necessary step but would not a support a federal tax to fund it, instead pushing for private capital, incentives and increased tolls to provide the needed funds.

The dissenting opinion states that raising fuel taxes is ineffective and ‘breeds wasteful spending’ and does not consider alternatives they project to be potentially more effective. They add that the proposal would unwisely increase the Federal government’s role in transportation issues and create an independent commission they consider impractical and reflective of bad policy.

“Raising fuel taxes won’t improve traffic congestion, it will only perpetuate our ineffective reliance on fossil-based fuels to fund infrastructure and send more of Americans’ hard-earned money to Washington to be squandered on earmarks and special interest programs,” Secretary Peters said. “A better way forward is to provide incentives to states willing to pursue more efficient approaches and to invest federal funds more effectively to give commuters real relief from gridlock.”

American Trucking Assns. president & CEO Bill Graves issued a statement on the effects of the proposal on the freight industry. “The Commission has provided a good starting point for Congress as we move toward Reauthorization in 2009,” he said. “Fixing our infrastructure problems is, without question, a significant financial undertaking. Current revenue streams are failing to keep pace with infrastructure needs. The Commission report illustrates that any increased investment must be coupled with systematic reforms, which would be essential to any long-term solution.

“The national economy is directly linked to freight transportation,” Graves added. “Therefore freight transportation must be an essential part of infrastructure design and planning. Through its report, the Commission acknowledges the need for a new and improved investment strategy. A strategy that supports not only the health of our highways, but the health of our future economy. One that includes a combination of steps designed to ease congestion, alleviate bottlenecks and repair aging infrastructure.”

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