US report backs fuel tax for infrastructure


ATA-backed mechanism seen as best option for that country but report contains call for hike

US report backs fuel tax for infrastructure
Dennis Dellinger emphasises the positives the report shows

 

As the Australian road tax debate continues to simmer, the latest input into similar issues in the US has just surfaced.

The American Transportation Research Institute (ATRI) has released a much anticipated assessment of that nation’s transportation investment options. 

The report, entitled A Framework for Infrastructure Funding concludes that the only meaningful mechanism for attaining the administration’s vision for a large-scale infrastructure program is through a federal fuel tax increase. 

The inefficiency of other mechanisms, including mileage-based user fees and increased tolling, will fall far short of the needed revenue stream without placing undue hardship on system users.

In addition, ATRI’s research documents that a federal fuel tax increase will incentivise states to generate multi-million dollar matches to the new federal funds, ultimately moving the US closer to the infrastructure investment goals proposed by both Congress and the President.

"Maybe the most important and unexpected benefit of a federal fuel tax increase is the hundreds of thousands of new, high-paying construction jobs that will be produced," Dennis Dellinger, the Cargo Transporters president who has links with ATRI, says. 

"We often assume that the only reason to raise the fuel tax is to lay more asphalt and concrete. 

"Forgotten in the mix is that tax revenues can simultaneously produce good roads and good jobs."

The report further documents the consequences of continuing with the "do-nothing" option. 

The US federal fuel tax has not been raised in more than two decades, resulting in significant costs to system users, particularly the trucking industry, ATRI says.  

While the trucking industry contributes more than US$18 billion in federal user fees each year, growing traffic congestion and freight bottlenecks now cost the industry more than $63 billion annually. 

The report also indicates that growth of e-commerce will likely slow as freight deliveries fail to meet the real-time demands of U.S. consumers.

Other key ATRI findings and recommendations include:

a newly created federal vehicle registration fee would be the most efficient mechanism to fill funding gaps associated with electric vehicle use. These fees could be seamlessly implemented using the same systems as those successfully used to collect state registration fees.

a bureaucracy as large as the Internal Revenue Service would be required to collect, manage and enforce a national vehicle miles travelled (VMT) tax on the more than 250 million vehicles registered in the US. Additionally, mileage tax evasion would likely skyrocket under a program that can’t "see" non-paying users.

the practice of road tolling continues to be an expensive proposition for collecting highway funds. While several toll systems slightly improved their administrative efficiency, the majority of toll systems spend more than ten cents of every dollar collected on administrative activities.  Many systems are losing money, and almost all privatized toll roads in the US have filed bankruptcy.  Finally, ATRI’s analysis found that many toll authorities have modified their public financial statements to increase complexity and decrease transparency of revenue management – which ultimately masks the inefficiency of toll roads.

in terms of secondary benefits from a fuel tax focus, ATRI’s findings suggest that every U.S. state would experience significant employment gains as a result of a 10 or 20 cent federal fuel tax increase. In total, states would receive between $15 billion and $30 billion or more annually through a federal fuel tax increase; nearly half a million jobs could be created nationwide with a 20 cent federal fuel tax increase.

according to the literature and public polling data, American taxpayers prefer a federal fuel tax over other funding mechanisms when the revenue is dedicated to transportation infrastructure.

Peak US body American Trucking Associations (ATA) underlines that the report is a vindication of its position on the use of the tax and its purpose.

"ATRI’s research corroborates what many of us have espoused in Washington DC and in every state capital: people are demanding action on transportation investment and the federal fuel tax is the ideal tool for delivering the much needed funding," ATA president Chris Spear says.

The full report can be accessed here.

 

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