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U.S. business, labor leaders urge Congress to raise gas tax

United States Chamber of Commerce President and CEO Thomas Donohue delivers his annual State of American Business address in Washington Janu
United States Chamber of Commerce President and CEO Thomas Donohue delivers his annual State of American Business address in Washington Janu

By Eric Beech

WASHINGTON (Reuters) - U.S. business and labor leaders urged Congress on Wednesday to raise the federal gasoline tax to prevent a fund that pays for road and bridge projects from running out of money as early as September.

U.S. Chamber of Commerce President Thomas Donohue and AFL-CIO President Richard Trumka told a Senate Environment and Public Works Committee hearing that allowing the Highway Trust Fund to run dry would slow road building and other infrastructure projects and hurt the U.S. economy.

"These investments not only create jobs but spur economic growth, ensure our country's long-term economic global competitiveness and improve the quality of life of our citizens," said Trumka, who heads the largest U.S. labor organization.

The Transportation Department estimates that the Highway Trust Fund, which relies on an 18.4 cents-a-gallon tax on gasoline and 24.4 cents-a-gallon tax on diesel, could run out of money as early as September. The taxes were last raised in 1993.

Trumka said he would support a 15-cents-a-gallon increase in gas and diesel taxes, phased in over three years, to bolster the fund, which takes in about $35 billion a year and is the nation's primary source of money for building and maintaining roads and bridges.

Donohue said other options to fix the shortfall, including cutting transportation projects or using other government revenues to shore up the fund's finances, would not be the best long-term solution.

"The simplest, most straightforward and most effective way to generate enough revenue is by increasing the federal gasoline and diesel taxes," he said.

Donohue, head of the nation's largest business lobby group, also supports a 15-cent increase phased in over three years.

But raising the gas tax may have a tough time getting through Congress. Representative Bill Shuster, chairman of the House of Representatives Transportation Committee, has said he would look to other sources of revenue because he does not think there is enough support for a gas tax hike.

Senate Environment and Public Works Committee Chairwoman Barbara Boxer has proposed doing away with the gas tax and instead would raise revenue from a levy on oil at refineries.

Boxer's committee is working on a multiyear bill for transportation funding to replace existing legislation that expires at the end of September. Boxer said she hoped the bill would be ready for the committee's consideration in April.

The highway fund has been depleted as Americans drive more fuel-efficient vehicles and reduce their driving due to higher gas prices and the slower economy.

Donohue pointed to a San Jose State University survey in 2012 that found 58 percent of Americans would support a gas tax increase if the money would be used to build and maintain roads and mass transit.

The American Society of Civil Engineers in a 2013 report said the country's infrastructure was in a woeful state from lack of investment, with one in nine bridges structurally deficient and 40 percent of its major highways congested.

Peter Ruane, president of the American Road and Transportation Builders Association, told the hearing that some states are already holding back on hiring for transportation projects because of uncertainty about federal funding.

(Reporting by Eric Beech; Editing by Jim Loney and Jonathan Oatis)

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