We are an industry sensitive to price increases at the gas pump. The higher the price, the more negative the pressure on our ability to attract prospective boaters. So when a significant hike in the federal gas tax is being pushed, it grabs our attention.
Such is the case for a call to hike the tax by 15 cents per gallon to 33.4 cents per gallon on gasoline and 39.4 cents per gallon on diesel. The proposal came in testimony concerning the reauthorization of MAR-21, the surface transportation spending bill that expires in September.
Support for the increase is coming from an unusual alliance, the U.S. Chamber of Commerce and the AFL-CIO. Both chamber president Thomas Donohue and AFL-CIO president Richard Trumka have testified that the U.S. Highway Trust Fund cannot be allowed to run out of money. They’re not alone. Many others agree that our infrastructure system is a critical national asset that drives growth, jobs, safety, mobility, trade and enhanced global competitiveness. We ship most of our boats over the highway system. Our customers take their boats over the highways.
The federal tax hasn’t been raised since 1993. Currently, the Highway Trust Fund takes in about $35 billion annually. But it has been declining as more fuel-efficient cars have reduced consumption. Meanwhile, inflation through the years has reduced the purchasing power needed to maintain highways and bridges. As a result, the Highway Trust Fund could be headed for bankruptcy. It’s already borrowing billions of dollars from the general fund. Next year’s shortage is projected to be $13 billion — by 2020, it’ll be $100 billion.
For us in the marine industry, it’s a real dilemma. We strive to hold down the cost of our boats (we don’t do real well) and we’ve traditionally opposed any tax policies that send out a “boating’s too expensive” message. Still, we need highways and bridges and the like.
Now, let me add to this Catch-22 situation. If the gas tax is increased, the Sport Fish Restoration and Boating Trust Fund (Wallop-Breaux) will get increased funds. Literally millions of dollars flow from this fund annually to do everything from building transient docks and pumpout stations to launching ramps and broad–based communications programs, like the Recreational Boating and Fishing Foundation with its sole mission of increasing boating and fishing participation. These are huge benefits we, as an industry, could not accomplish. If anything, we need even more.
I nearly flunked Economics 101, but something seems contradictory here. The biggest reason gas consumption and tax revenues have steadily dropped since 2007 is because people are driving less … because of higher gas prices. So, if we kick up the tax, will people drive even less?
Add to that President Obama’s announcement last week that he’s ordered the Environmental Protection Agency and the Department of Transportation to issue higher fuel efficiency standards for medium and heavy-duty vehicles by March 31, 2016. According to USA Today, these vehicles account for 25 percent of road-fuel use. That should reduce consumption (and tax revenue) even more.
Finally, the President has also said: "We're going to double the distance our cars and light trucks can go on a gallon of gas by 2025." Remember, he pledged to decrease fuel prices at the pump in his State of the Union Address last month. How’s all this going to work?
I’m confused. Should we support a gas tax hike or oppose it? What do you say?