The federal gas tax hasn’t been raised since 1993, but that could change soon as a bipartisan group of House members has endorsed a plan to pump up the levy.
The group, which consists of 58 representatives, also proposed examining a vehicle miles traveled tax, which would impact the growing number of electric vehicles as another possible income stream. The money would be used to pay for infrastructure spending. President Biden has proposed a $2.3 trillion infrastructure program, and Congress is looking for ways to pay for it.
The federal gas tax has long stood at 18.4 cents per gallon, and the group’s endorsement of an increase did not suggest a new amount. Any increase in gas prices is bound to cause some consumer discomfort, though. Gas prices in 2021 are up more than $1 per gallon compared to a year ago, according to the American Automobile Association (AAA), climbing from $1.79 in 2020 to $2.89 now. And they’re expected to hit $3 per gallon soon, as demand soars.
The White House has also expressed discomfort with raising the gas tax, saying it would more greatly impact lower-income Americans, who have not had the means to upgrade to an electric vehicle. Senate Republicans have also expressed concerns about a gas tax increase.
Biden’s plan targets four main hard infrastructure categories: transportation; public water, health, and broadband systems; community care for seniors; and innovation research and development. The President plans to get most of that money by permanently raising the corporate tax rate from 21% to 28% and making it harder for multinational corporations to avoid taxes. On Thursday, he also proposed nearly doubling capital gains taxes to as high as 43.4%. That proposal is unlikely to pass without unanimous Democratic support.
