Federal Gas Tax Could be Running on Empty

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Federal Gas Tax Could be Running on Empty


NEW YORK -- The federal gas tax could soon become a thing of the past. The tax expires at the end of September and momentum is shifting toward not renewing the tax, reported Politico.

Although consumers will initially be happy if the 14.8-cent per gallon tax is scrapped, not so fast. According to CNN Money, states would likely make up for the loss of federal funds by increasing their own gas tax or other related fees.

If states don't increase or enact new gas taxes, drivers can expect a bumpy ride. The gas tax collected by the government is used toward road construction maintenance and mass transit projects. The federal highway program uses $32 billion each year collected from the gas tax.

A bill introduced by U.S. Senate Republicans would allow states to opt out of the federal highway program so they can handle road improvements themselves. Politicians who support ending the federal tax provide three reasons, according to CNN Money. First, they believe states can do a better job of building and maintaining the nation's infrastructure. Second, they feel it doesn't make sense to collect money on a state level and then send it to the federal government, only to have it returned to the states. Third, when federal money is used, union labor becomes necessary.

Wrote CNN Money, "The Davis-Bacon law increases the costs of new roads, bridges, etc. by 25 to 33 percent," said Grover Norquist, head of the advocacy group Americans for Tax Reform, referring to stipulations set forth for much federal project workers need to be paid. "Much money is siphoned off to pay union workers in subway systems or to build bike paths…not roads."