Trump administration weighing gas tax hike to pay for $1.5T infrastructure revamp
U.S. Transportation Secretary Elaine Chao said the government is considering raising the tax on gasoline as one option to pay for the newly released infrastructure proposal.
“The president has not declared anything out of bounds, so everything is on the table,” Chao said Tuesday, in response to a question about whether the federal government would raise the fuel tax to fill funding gaps.
Chao added that raising the gas tax is not ideal as it could have a “regressive impact” on hourly workers.
The federal fuel tax has not been raised since 1993. The current rate is set at 18.4 cents per gallon and has not kept pace with inflation.
On Monday, the White House unveiled details of its infrastructure initiative, which calls for $1.5 trillion in spending over the course of a decade and relies heavily on states to attract outside private investment to fund major projects.
The federal government would commit $200 billion to the effort and provide grants to states with proposals that can attract additional investment opportunities.
For the majority of projects, federal funds are to be used to pay for a maximum of 20% of the cost, a big reversal from the current policy in which taxpayer money can account for as much as 80% of highway repairs.
On Tuesday, Chao re-emphasized the need for private companies to invest in public infrastructure projects, saying the aim is to “use federal dollars as seed money to encourage infrastructure investment by the states.”
Chris Spear, the CEO and president of the American Trucking Association, advocated during an interview on FOX Business this week raising the fuel tax by 5 cents per year over the course of four years, which he said would raise $340 billion to help pay for the infrastructure revamp.
As previously reported by FOX Business, shifting the funding burden more heavily onto states rather than simply providing federal dollars for infrastructure projects could allow for more flexibility to develop projects catering to specific local needs.
In a show of support, Trump will donate his quarterly salary to the Transportation Department, according to White House press secretary Sarah Sanders.
Chao also said the administration would address the Highway Trust Fund, which funds government spending for most highways and mass transit, because dwindling funds are expected to pose a “huge problem” by 2021.