President Trump on Monday said he was open to raising the federal tax on gasoline and using the new revenue for his infrastructure package, a potentially major policy change as his top advisers try to assemble a plan to finance $1 trillion in new projects.
“It’s something that I would certainly consider,” Bloomberg quoted Trump as saying. The president added that he would be inclined to back the idea “if we earmarked money toward the highways.”
Trump wants to assemble a $1 trillion infrastructure plan that would finance work on roads, bridges, airports, schools, housing and broadband access, among other things. Aides have said the package would be financed by roughly $200 billion in federal money, with the rest coming from private financing. But Trump has also suggested that he could back a plan that received only federal support.
Trump, whose policy prescriptions have largely been articulated broadly and lack many details, has expressed openness to a wide range of ideas since taking office, some of which he or his administration have later ruled out.
And shortly after Trump's comments to Bloomberg were made public, White House press secretary Sean Spicer tamped down expectations that the White House would ultimately support increasing the gasoline tax. Spicer, speaking at his daily White House briefing, said Trump had an "open mind" about the idea but did not at this point support it. Instead, it was something he had been asked to consider by a trucking group as a way to improve highways. Trump was considering the increase "out of respect" for that trucking group, Spicer said.
The federal tax on gasoline is 18.4-cents per gallon, and for diesel, it is 24.4 cents per gallon. The gasoline tax was last raised in 1993. States charge their own gasoline taxes on top of the federal tax.
Many Republicans oppose any sort of tax increase, but some have at times backed an increase in the gas tax. Rep. Tom Rice (R.-S.C.) in 2015 backed a measure that would have raised the gasoline tax by 10 cents per gallon to give states more certainty about future funding.
Gas tax increases are favored by some environmentalists, as it provides an incentive to buy more fuel-efficient cars. But as a tax on a purchase rather than on income, the tax also takes a bigger proportional bite out of the budget of low-income individuals, a troubling feature for those pushing for a more progressive tax code.
The Obama administration opposed raising the gas tax, though Transportation Secretary Anthony Foxx at one point said they would “keep an open mind” if Congress passed one to boost finances in the highway trust fund.
Late in his presidency, Barack Obama proposed a new $10 fee on every barrel of oil, something that critics likened to an increase in the gasoline tax. The fee would have to be initially paid by oil companies, but those costs would likely be passed on to consumers. The Obama administration wanted money raised by the new fee, or tax, to go toward transportation research and infrastructure investments, but it was not approved by Congress.
The federal gasoline tax raised $20.6 billion for the highway trust fund in 2015, and the diesel tax raised an additional $8.5 billion, according to the Congressional Budget Office.