Biden sends federal motor fuels tax packing, Washington insider says

From Freight Waves. President Joe Biden has thrust a dagger into the heart of the federal motor fuels tax and, with it, the trust fund that’s long been dedicated to paying for highway projects. So says Randy Mullett, a multidecade veteran of the inside-the-beltway transportation wars and head of a Virginia-based consultancy. Biden’s staunch opposition…

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From Freight Waves.

President Joe Biden has thrust a dagger into the heart of the federal motor fuels tax and, with it, the trust fund that’s long been dedicated to paying for highway projects.

So says Randy Mullett, a multidecade veteran of the inside-the-beltway transportation wars and head of a Virginia-based consultancy. Biden’s staunch opposition to an increase in the federal fuels tax — which hasn’t been raised since 1993 — sends a clear message to Congress that the Highway Trust Fund, which for decades has used fuel tax proceeds to funnel money to states for road infrastructure projects, has reached the end of its useful life, Mullett said. The Trust Fund was created in 1956 to fund the interstate highway system and other road projects.

“The days of a dedicated highway trust fund are finished,” Mullett said Tuesday afternoon during a virtual session at the SMC3 annual summer meeting.

House Democrats had been tinkering with the idea of raising the fuel tax by indexing it to inflation, Mullett said. Biden’s pronouncement quashed those efforts, he said. From now on, every infrastructure project will compete with other federal spending initiatives for the same pot of money, a prospect no one in the transport ecosystem relishes, Mullett said.

Bereft of federal money, states will be pressured to continue hiking their fuel taxes, Mullett said. Over the past three decades, states have repeatedly raised fuel taxes and related fees to pay for necessary infrastructure improvements.

Perhaps the oldest unresolved issue in official Washington has been how to pay for infrastructure improvements absent any increases in the federal fuels tax. The tax has sat at 22.4 cents per gallon on diesel and 18.4 cents per gallon on gasoline since President Bill Clinton’s first year in office. Groups including shippers, carriers and the 3 million-strong U.S. Chamber of Commerce have repeatedly endorsed measures to raise fuel taxes. However, the Obama administration consistently rejected it as a regressive tax, a position that Biden, who served as Obama’s vice president, has adopted. The Trump administration talked early on about supporting a fuel tax hike, but nothing ever materialized.

See the complete article online at Freight Waves.

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