U.S. Panel Will Recommend Gas-Tax Boost, Person Says

1/10/08

By John Hughes and Angela Greiling Keane / Bloomberg

A U.S. panel created to recommend ways to fund road construction intends to propose that federal gasoline taxes rise as much as 40 cents per gallon over five years, a person with direct knowledge of the plan said.

The group will suggest that the current tax of 18.4 cents per gallon climb by 5 cents to 8 cents annually, said the person, who didn't want to be identified before the report is released. After the five years, increases would be pegged to inflation, the person said yesterday.

The proposals, by the National Surface Transportation Policy and Revenue Study Commission, may bolster efforts by members of Congress who have tried unsuccessfully to raise gasoline taxes over the objections of President George W. Bush. A change wouldn't take effect until after Bush leaves office.

An increase is "needed, but politically it's difficult,'' said former Transportation Secretary Norman Mineta in an interview. While the report will make it easier for Congress to raise the gasoline tax, the maximum 40-cent boost isn't likely, he said.

The tax was last raised, by 4.3 cents a gallon, in 1993. The commission will also recommend that state fuel taxes go up by an amount slightly larger than the federal increases, according to the person.

Jan. 15 Release

The commission is scheduled to release a range of recommendations Jan. 15 in Washington. The panel was created by Congress in 2005 with the purpose of issuing the report.

Trina Leonard, a spokeswoman for the 12-member commission, declined to comment on a gas-tax recommendation.

The proposals may also include greater use of tolls and public-private partnerships, said Janet Kavinoky, transportation director for the U.S. Chamber of Commerce.

U.S. Transportation Secretary Mary Peters and two other members of the commission plan objections over the group's majority findings that fuel taxes should go up, Kavinoky said.

Those objecting also include Peters' former deputy, Maria Cino, and Rick Geddes, a Cornell University professor, Kavinoky said. The Chamber backs an increase in the fuel tax as well as other means to pay for infrastructure improvements, she said.

Leonard, the commission spokeswoman, said some members "have differing views on some issues'' and "those are being presented.''

Brian Turmail, a spokesman for Peters, said raising taxes won't cut congestion and will send more dollars to Washington that will be misspent.

`Bridges to Nowhere'

"The last thing we need is more of the same kind of broken policies and ineffective tax hikes that have given commuters traffic to everywhere and bridges to nowhere,'' Turmail said. He declined to say if Peters would object on the tax finding.

Rather than tax increases, the Bush administration has promoted public-private partnerships in which financial firms such as Macquarie Bank Ltd. and Goldman Sachs Group Inc. join other investors to provide roadway funding.

Goldman and Macquarie, as well as Cintra Concesiones de Infraestructuras de Transporte SA and Transurban Group, this week announced they had teamed to push for more private investment in U.S. infrastructure.

Groups including the Chamber say they are open to examining private investment, though higher taxes are also needed. The panel is parting ways with Peters on taxes, Kavinoky said.

Geddes wouldn't discuss report specifics until it is released, though he said all panel members agree on issues in the document. "The commission did recognize the need for more investment in the nation's infrastructure,'' he said.

Blow to Bush

The Bush administration "lost out on their efforts to, from our vantage point, hijack the commission to primarily look at privatization and tolling,'' said Rod Nofziger, a lobbyist for the Owner-Operator Independent Drivers Association, a trade group of small truckers.

Cino said through Leonard that she looks forward to the release of the report. If commissioners have expressed differing views on some of the issues, those will be shared, she said, according to Leonard.

Other highway panel members include Paul Weyrich, chairman of the Free Congress Foundation; Matthew Rose, chief executive officer of the Burlington Northern Santa Fe Corp.; and Steve Odland, CEO of Office Depot Inc.