As members of Congress and the White House struggle to find a suitable replacement for, or addition to, the current gas tax that provides funding for transportation infrastructure, at least one lawmaker is floating the idea of a sales tax on motor fuels.
The possibility of switching from the 18.4-cent gas tax and 24.4-cent diesel tax to a sales tax has been raised in public forums recently by Rep. John Mica of Florida, the leading Republican on the House Transportation and Infrastructure Committee.
Mica proposed temporarily replacing the gas tax with a sales tax, during a freight industry meeting in May, according to the Journal of Commerce.
No proposals to change the current gas tax have been considered by the Obama administration, according to a Department of Transportation spokesperson.
The administration has repeatedly opposed the idea of increasing the current fuel tax, though that is the funding option most commonly discussed by experts.
The House Transportation Committee is looking at "a number of revenue options to finance the program, including the sales tax concept," said a committee aide. But chairman James Oberstar, D-Minn., and Mica have not formally discussed using a sales tax, the aide added.
Still, the idea of switching to a percentage sales tax or adding it to the existing tax has garnered support from a federal commission that was charged with recommending solutions to the country's nagging transportation-funding problem.
The National Surface Transportation Infrastructure Financing Commission found last year that a sales tax on motor fuels is a strong federal option — better than a general fund transfer — for raising more revenue to support highways and bridges.
"The revenue-generation potential of a national motor-fuel sales tax would be driven by several variables," such as fuel prices and the floors or ceilings that would be imposed on the tax.
A national sales tax of 1% on gas could raise up to $3.6 billion annually if gas prices were at $2 per gallon, or $7.2 billion annually if they were at $4 per gallon. That would mean that every 0.14-0.28% sales tax would raise $1 billion per year, the commission found.
There currently are non-fuel sales taxes, such as a 12% sales tax on the retail price of heavy tractors and trucks.
However, the commission found that those revenues have historically been volatile and sensitive to economic cycles; non-fuel tax revenues fell by about 46% from 2007 to 2008.
A fuel sales tax would eventually run up against the same problem that has plagued the 18.4-cent gas tax — revenues would dwindle as more drivers shift to fuel-efficient and alternative-fuel vehicles.
In addition, fuel price volatility would make year-to-year revenues even less certain, while political and public support for the tax could shrink as gas prices climb higher.