President Donald Trump has a plan to invest in infrastructure, and his administration believes it has found a way to pay for it: A gas tax.
According to Senator Tom Carper (D-DE), the President suggested in a meeting last week that a 25-cent increase in gas and diesel taxes would be needed to help pay for his plan.
"[President Trump] said that he knew it was a difficult thing for legislators to support and said that he would support the leadership to do that and provide the political cover to do that," Carper told CNN. "And he came back to that theme again and again and again."
The White House formally unveiled the infrastructure effort this week laying out a plan to create $1.5 trillion total to improve the country's bridges, roads, and tunnels, but use only $200 billion of federal money.
How does that discrepancy get made up? By leveraging local and state tax dollars and private investment... and a gas tax.
Response to the gas tax concept has been decidedly negative, as would be expected with any nationwide initiative that results in higher prices at the pump, but not everyone is against the idea. The U.S. Chamber of Commerce, for one, has committed to lobbying for a gas tax, suggesting that a 25-cent tax would raise $394 billion.
A deeper analysis of the plan from the firm Energy Innovation found that a 25-cent gas tax hike would increase annual electric vehicle (EV) sales by about 100,000 per year by 2050, putting around 1.2 million more EVs on the road.
Among the loudest voices condemning the idea of a gas tax were the major Republican donors, the Koch brothers, who sent a letter to Congress suggesting that a higher gas tax would inevitably result in higher consumer prices on wide range of good and services.
Transportation Secretary Elaine Chao was also critical of the idea, saying: "The gas tax, like many of the other pay-fors that are being discussed, is not ideal. There are pros and cons. The gas tax has adverse impact, a very regressive impact, on the most vulnerable within our society; those who depend on jobs, who are hourly workers. So these are tough decisions, which is why, once again, we need to start the dialogue with the Congress, and so that we can address these issues on this very important point."
Given all of the vitriol associated with the gas tax, is a large scale increase really plausible? As Secretary Chao explained, gas taxes are typically felt hardest by those who make the least. That likely won't be appreciated by the 41 percent of Americans that make less than $50,000 annually who voted for Trump in the 2016 election. What's more, it is sure to create some political problems for Republicans who diametrically oppose more taxes, especially as they prep for the midterm elections.
But outside the political issues, one has to wonder if would garner as much revenue as estimates predict.
While there is still plenty of gas being consumed by Americans - 143.37 billion gallons in 2016, a daily average of about 391.73 million gallons, according to the US Energy Information Association (EIA) - the automotive landscape has changed drastically. Low gas prices have slightly suppressed hybrid sales, but these vehicles still continue to sell well. So well, in fact, that we've seen certain states try to enact alternative ways to recoup lost gas tax funds.
In July of 2016, Oregon enacted a program where qualifying residents could choose among three devices that track their mileage and charge them a 1.5 cent fee for each mile they drive on public roads in the state. The gas tax they pay at the pump would then be deducted to avoid double taxation.
Meanwile, several automakers, like Volvo, are still betting big on hybrid sales. The Swedish manufacturer said that, by 2019, every one of the cars it produces will have an electric motor. And with Tesla ramping up both production and delivery on its electric cars, including the reasonably priced Model 3, Americans may find themselves not gobbling up quite as much gas in the near future.
Still, nearly $400 billion in revenue is nothing to sneeze at, especially if the President believes this can be a quick, one-off hike to pad his infrastructure bet. And with consumers still enjoying relatively low gas prices, the 25-cent hike may go relatively unnoticed to a large swath of drivers. It might not be a long-term solution, or a very popular one to boot, but a 25-cent gas hike could be a reality very, very soon.