Tax Cut Will Devastate Highway Improvement
If anyone believed TEA-21 provided the transportation construction industry a chance to ignore Washington, D.C. for a few years until the next reauthorization debate began, the last few months must have been a severe disappointment. The new year is only six months old, but the transportation construction market has been under heavy attack.
At the end of February, Sen. Ben "Nighthorse" Campbell (R-Colo.) introduced legislation to temporarily suspend the 24.4 cents-per-gallon federal excise on diesel motor fuel. The move was intended to provide truckers with some relief from rising fuel prices. The National Taxpayers Union went further, suggesting an across-the-board 10 cents-per-gallon reduction in all federal highway user fees.
Building on the principle of the Campbell bill, Senate Majority Leader Trent Lott (R-Miss.) introduced legislation, S. 2285, the week of March 20 to repeal the 4.3 cents of the gasoline tax from April 15, 2000, to Jan. 1, 2001. The measure also included a provision that would eliminate the federal motor fuels tax for the same period if the national average price of gasoline exceeds $2. It suggested the revenue lost to the Highway Trust Fund would be restored through a budget surplus payback. This effort was defeated twice in the Senate.
Following the second defeat, Lott announced the gas tax repeal issue was not going away and stated his intention to bring S. 2285 to the Senate floor again later in the year.
An analysis by William Buechner, American Road & Transportation Builders Association vice president for economics and research, shows these proposals would have a devastating impact on state highway improvement programs.
The federal diesel motor fuels excise generates more than $8 billion per year for the Highway Trust Fund. Ten cents of federal gasoline excise generates more than $16 billion to the fund. Under Sen. Campbell's bill, California would lose $772 million in highway improvement money. Other states would also lose millions: Texas ($554), Pennsylvania ($419), New York ($390), Florida ($344), Ohio ($303), Michigan ($256) and New Jersey ($223).
Rolling back the federal excise would eliminate 638,000 jobs that are sustained through public investment in highway construction programs-with concurrent losses of federal and state income tax revenue and increases in unemployment-related government expenses. The 10 cent across-the-board cut would eliminate 1.3 million jobs.
Over the past 50 years, every $1 billion invested by the public in government-financed road improvements has helped prevent 1,400 premature deaths and nearly 50,000 injuries. This has saved American society more than $2 billion on health care, insurance, lost wages and productivity costs. The tax cut proposals would jeopardize this public health return-from-investment in transportation.
If the federal motor fuel excise is repealed or reduced, truckers will face increased risk on the interstates they travel every day. Without this revenue, highways will become more congested and less safe for everyone.
Reducing the federal motor fuels excises would have the perverse effect of retarding road safety and efficiency improvements that benefit truckers and the general motoring public alike. It would also rob the nation of air quality benefits that accrue from less-congested and well-maintained highways. Fuel tax cuts are simply bad public policy.
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