BACKGROUND:

In response to rising gas and diesel prices due to increased global demand for oil, the war in Iraq, shortage of domestic refining capacity, and cleaner fuel requirements and higher fuel efficiency standards, discussion in Congress about suspending or repealing all or a portion of the federal motor fuels tax has surfaced repeatedly in the past couple of years. Supporters argued that such action would help moderate the rise in gasoline prices that was occurring and provide relief to consumers at the gas pump.

The issue again came to fore in the spring of 2008 when Sen. John McCain (R-AZ), Republican presidential candidate, proposed suspending the 18.4-cent per gallon of gasoline and the 24.4-cent per gallon of diesel fuel federal highway user fees from Memorial Day to Labor Day. Democratic presidential candidate Sen. Barak Obama (D-IL) rejected the proposal, citing a vote he cast in the Illinois State Senate for a six-month, five-percentage point break on the state’s 6.25 percent gas sales tax when the average price of gas was $1.52 per gallon. He voted for the suspension but acknowledged subsequent studies showed the tax break did not benefit consumers to any great degree and pointed to that as a reason he opposes a suspension. Further, he called McCain’s proposal “pandering.”

With gasoline prices continuing at record highs, talk of a gas tax repeal or suspension at the federal level is ongoing. Since discussion of suspending the gas user fees at the state level also has continued, NSSGA compiled a state-by-state chart of state actions on the gas user fee for NSSGA member reference.

TALKING POINTS:

• NSSGA opposes repeal or suspension of the federal gasoline excise tax.
• Traffic congestion costs American motorists $78.2 billion a year in wasted time and fuel costs. Americans spend 4.2 billion hours a year stuck in traffic.
• According to the DOT’s 2006 Conditions and Performance report, the average annual investment required over the 20-year period from 2003 to 2022 to maintain the highways and bridges is projected to be $78.8 billion. The average annual investment required to implement all cost-beneficial improvements on highways and bridges is projected to be $131.7 billion over the same period.
• It is counterintuitive to eliminate or suspend the source of funds that impacts the quality and security of every American life.
• If the federal motor fuel user fee were to be suspended for six months, the Transportation Information Program estimates that lost transportation revenues would be $17.5 billion, resulting in the loss of $100 billion in transportation benefits to consumers and the loss of 740,000 jobs nationwide.
• Federal surface transportation law ties federal highway investment in state transportation programs dollar for dollar to incoming revenues to the HTF’s Highway Account.
• There is no guarantee that any reduction of the gas user fee would be passed along to consumers.
• The increased price of gasoline is generally understood to result from a shortage of refining capacity, changeover to cleaner fuels mandated by the 1990 Clean Air Act Amendments, and distribution limitations plus increased demand in China and India. Cutting the gas user fee will not increase supply since according to the Energy Information Agency refineries are operating at 100 percent capacity.
• Roadway conditions are a significant factor in approximately one-third of traffic fatalities. There were 41,059 traffic fatalities in 2007 in the U.S.
• In its 2005 report card on America’s Infrastructure, the American Society of Civil Engineers graded American roads with a D, down from a D+ on its 2003 report card, and our bridges with a C.
• The Road Information Program (TRIP) in 2008 reports that failure to make needed repairs to our nation’s roads costs motorists an additional $67 billion a year – or $333 per motorist – in extra vehicle operating costs.
• Cutting the gasoline user fee will result in congestion, causing increased pollution that costs money, wastes fuel, and impedes highway safety improvements that save lives.

Updated: November 2008