Gas-Tax Hike Finds Few Friends in Congress Despite Trump Support
(Bloomberg) -- Despite backing from groups as wide ranging as the U.S. Chamber of Commerce, the lobby for truckers -- and now President Donald Trump -- a proposal to raise gas tax for the first time in 25 years appears to be going nowhere fast on Capitol Hill.
Trump surprised a bipartisan group of House and Senate committee leaders Wednesday at the White House by offering to support a 25 cent-per-gallon increase in the tax on gas and diesel fuel dedicated to improving roads, highways and bridges. But that wasn’t swaying Republican opinion Thursday.
“I don’t think there is support for it right now,” Representative Kevin McCarthy of California, the second-ranking House Republican, said in an interview Thursday. Asked whether there’s support among Senate Republicans to increase the fee, Majority Leader Mitch McConnell spokesman Don Stewart referred to previous statements made by the Kentucky Republican. “It’s always no,” Stewart said.
Even Marc Short, Trump’s legislative affairs director, said Thursday in an interview the “political reality” is that “there is not support for a gas tax in Congress.”
A White House official declined to comment on Trump’s discussions in the closed-door meeting, called to discuss his $1.5 trillion infrastructure plan released Monday. But Tom Carper of Delaware, the top Democrat on the Senate Environment and Public Works Committee, said Trump offered his support at the meeting.
Senator Jim Inhofe of Oklahoma, who was also in the meeting, said reports about Trump’s backing were “exaggerated” but that the president did say all options were on the table and he would support an increase to the fuel levies.
The prospect of a higher gas tax has pitted the Chamber against another one of the most powerful forces in conservative American politics. The political network led by billionaire industrialists Charles and David Koch is opposed to raising the levy right after Congress passed a $1.5 trillion tax-cut bill.
Senate Judiciary Chairman Chuck Grassley of Iowa said he doesn’t think McConnell will let the gas tax go anywhere.
“He’ll never get it by McConnell,” Grassley said in an interview. “For a period of many years, I’ve heard McConnell not wanting to be the tax-increase party.”
There’s even hesitation on Trump’s cabinet. Transportation Secretary Elaine Chao told reporters on Tuesday that while “everything is on the table,” increasing the gas tax “is not ideal.”
“There are pros and cons,” Chao said in a White House briefing. “The gas tax has adverse impact, a very regressive impact, on the most vulnerable within our society.”
The 53-page legislative outline for Trump’s infrastructure plan made no mention of the gas tax or new revenue, and White House officials have been saying that while the president was open to new sources of funding, they were not being proposed.
The current federal tax is 18.4 cents a gallon on gasoline and 24.4 cents on diesel. Raising the gas tax by a quarter could generate $36 billion a year, said Benjamin Salisbury, an analyst with B. Riley FBR Inc., in a research note to clients.
Pennsylvania Representative Bill Shuster, the chairman of the House Transportation and Infrastructure Committee, has encouraged his Republican colleagues to consider raising the gas tax as a way to keep the Highway Trust Fund -- which finances road, bridge and transit projects -- solvent.
But increasing tax in an election year “will be quite difficult,” said Jack Schenendorf, who served as vice chairman of the National Surface Transportation Policy and Revenue Study Commission, a congressionally mandated panel that recommended increasing the gas tax by as much as 40-cents in 2008.
“It’s quite necessary and Congress has known it’s necessary for a long long time,” Schenendorf, a lawyer at Covington & Burling LLP, said in an phone interview. “This is a real opportunity with the president on board.”
The message to Trump from Tom Donohue, president and chief executive officer of the U.S. Chamber of Commerce, was “thank you for your super endorsement” of the gas-tax increase to pay for a major segment of his infrastructure plan, spokeswoman Blair Latoff Holmes said on Twitter.
The chamber, which calls itself the biggest business lobby in Washington, also has advocated a 25-cent increase to raise an estimated $394 billion over 10 years. The American Trucking Associations has suggested a 20-cent-per-gallon fee on all transportation fuels at the wholesale level over four years to generate as much as $340 billion over a decade.
“If President Trump hadn’t raised infrastructure as one of our top national priorities, we wouldn’t even be talking about this,” American Trucking Associations Vice President Bill Sullivan said in a statement. “We welcome this debate and process and will work with drivers and businesses and families impacted to help the President and Congress succeed.”
Orrin Hatch, the Utah Republican who chairs the Senate Finance Committee, said "there is not a lot" of Republican support for increasing the gas tax.
"We’re not for tax increases, but everybody knows something has to be done."
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