On the Road to Higher Taxes

It’s a rare day when business leaders join together and plead with Congress to raise their taxes.

That’s what happened Tuesday, when officials from the U.S. Chamber of Commerce, the National Association of Manufacturers and the American Trucking Associations endorsed an increase in gasoline and diesel taxes in order to fund more robust—and more rational—federal transportation programs.

They were joined by an official from AAA, the automobile club best known for the services it provides its members. In this case, however, the emergency road service that AAA is promoting is quick action on federal surface transportation legislation.

The current transportation measure expires in just over a week, on September 30. The House has a new bill ready for consideration, but the Senate hasn't gotten around to the task. So now, the White House and some on Capitol Hill want to extend the current law for 18 months, until 2011, when a new Congress can tackle the issue of transportation policy and the even trickier question of how to pay for new roads and other infrastructure.

That’s too long to wait, business leaders said. Underinvestment in highways, railroads and ports has resulted in congestion that costs businesses money. Workers sit in traffic instead of doing productive work, and goods get stuck at choke points throughout the U.S. instead of being where they’re supposed to be.

A new transportation bill is needed to address this congestion, and prepare the nation for future growth, business leaders said. Simply extending the current law won’t do the job—that won’t provide enough money, and it doesn’t include reforms that are needed to ensure the money is spent wisely. Business groups want to make sure freight is a top priority, and they want federal money spent on transportation projects that are national priorities, not earmarked for local pork-barrel projects.

“Those reforms we believe are needed now, not years from now,” said Bill Graves, president of the American Trucking Associations.

“We are anxious to significantly reduce the period of time we are going to be in limbo,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce.

“If we don’t tackle this now, we are not going to emerge from this economic downturn the way we need to,” said Jay Timmons, executive vice president of the National Association of Manufacturers.

They want Congress to extend the current bill for only three months, and then get to work immediately on a new transportation policy. If the policy is right, they’ll support a modest increase in gasoline and diesel taxes to pay for it. But it’s not really a tax, Donohue said. It’s a “user fee, and we haven’t increased it in 16 years.” The officials didn't say how much of a tax increase they'd support, other than to say it should be "modest"

(Current federal gas tax is 18.4 cents per gallon, and federal diesel tax is 24.4 cents. States also impose gas and diesel taxes — an average of around 20 cents per gallon.)

Most Americans won’t look at it that way, however. When they pay more at the pump, it will feel like a tax increase. Many will complain loudly. So will some business groups. The National Federation of Independent Business likely will contend, as it has in the past, that small businesses can’t afford higher gasoline prices.

And someday, in that carbon-free utopia we’re moving toward, we won’t be using gasoline anymore. We’ll have to find some other way to fund highways.

That day is not today, however.