Trump, Dems, Business Want a Gas Tax Increase. The President’s Economic Advisers Suggest a Better Idea.

Aside from banning bump stocks, no policy in Washington seems to have more bipartisan appeal than raising the federal gas tax.

The idea is beloved by such Democrats as Rep. Peter DeFazio of Oregon and Sen. Tom Carper of Delaware—the ranking minority members of the House and Senate committees that handle infrastructure. It’s beloved by the Chamber Commerce, which floated the idea of a 25 cent per gallon tax increase in January. Some congressional Republicans, such as House Transportation Committee Chairman Rep. Bill Shuster (R-Penn.), have voiced their support. So has President Donald Trump, who has suggested a gas tax hike could help pay for the direct federal spending in his $1.5 trillion infrastructure plan.

Less impressed: the president’s own Council of Economic Advisers.

In a Wednesday report, the council outlined several problems with the current gas tax, from its failure to adequately charge more fuel-efficient vehicles for the wear and tear they cause on the roads to its failure to charge drivers for traffic congestion.

Far from raising the gas tax, the report suggests a wholesale shift toward the funding mechanism where drivers are charged for the road they use, not the gas they burn.

“Assessing a charge based on mileage instead of gasoline consumed,” the report says, “would link consumers’ choices more closely to the costs they impose, including congestion, emission, pavement damage, and so on.”

A gas tax is blind to the motorists’ choices and the externalities they impose on public roadways. Mileage fees, by contrast, can be fine-tuned to capture these costs. City drivers could pay more to cover for higher costs of maintaining urban roadways, for example. Highway prices could vary based the time of day, to moderate rush hour traffic.

Mileage-based user fees are increasingly popular among policy experts, says Baruch Feigenbaum, a transportation policy analyst at the Reason Foundation (the nonprofit that publishes this website). Unlike tolls charged to access certain roads or stretches of road, mileage fees would apply to every mile driven on any public road.

“I think most folks in the transportation world are proponents of the ‘users pay, users benefit’ rationale,” says Feigenbaum. “It’s the most efficient. The folks using the roads are the ones who are influencing the policy. It’s a direct relationship.”

Feigenbaum points to a number of states where experiments with mileage-based user fees are already underway.

Oregon—coincidently the first state ever to impose a gas tax—has operated a voluntary “vehicle mileage tax” program since 2015. Drivers who opt into the program pay a 1.7 cent–per–mile fee and receive a rebate for the gas taxes they pay.

California operated a “road charge pilot program” from July 2016 to March 2017, testing the idea out on some 5,000 volunteers. Washington state is conducting a similar mileage charge pilot program with 2,000 drivers this year. Colorado, Hawaii, Utah, and Minnesota are all studying the idea too.

Both Feigenbaum and the Council of Economic Advisers report concede that mileage-based user fees have yet to be tried on a mass scale, and that the technology still has a way to go before it is ready for implementation on the federal level.

That makes a federal gas tax increase more attractive in the short term, particularly for those looking at it as a way of paying for Trump’s infrastructure proposal. But it still faces an uphill struggle, with many Republican lawmakers firmly against it. “I oppose raising the federal gas tax,” Senate Environmental and Public Works Committee Chair John Barrasso (R-Wyo.) told the Washington Post. Sen. John Cornyn (R-Texas) has also said a gas tax is not going to happen.

Conservative pressure groups have come out against the idea as well, linking the issue to the recently passed tax reform bill.

“Just a few months ago, Congress provided long-awaited and much-needed relief to American taxpayers through a comprehensive overall of the federal tax code,” says Mary Kate Hopkins of Americans for Prosperity. “A gas tax increase would claw back a large portion of that benefit just as individuals and families are starting to see the impact of tax reform.”

Feigenbaum suggests that a strong personal push by President Trump could be enough to overcome this opposition. Whether the president would be willing to sabotage his first major legislative achievement to pay for his second remains to be seen.