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Proposed gas tax increase fires up debate

By Peter Valdes-Dapena, senior writer


NEW YORK (CNNMoney.com) -- A task force charged with reining in U.S. debt is proposing a 15 cent per gallon increase in the federal gasoline tax.

Federal fuel taxes currently stand at 18.4 cents a gallon for gasoline and 24.4 cents for diesel fuel.

The draft proposal, which is included in a package of proposed tax reforms by the co-chairmen of President Obama's fiscal commission released on Wednesday, calls for the increase to begin in 2013. Gas taxes would rise by one cent every three months beginning in January 2013, until the 15 cent increase has been reached, a senior Committee staffer said.

Although the increase seems dramatic, gasoline prices have been fluctuating by that amount, or more, during the course of a few weeks. In fact the average price of regular unleaded gas has jumped 20 cents from October 1, 2010 to today.

The proposal calls for the funds to be "dedicated toward fully funding the transportation trust funds and therefore eliminating the need for further general fund bailouts."

The transportation trust fund -- the pot from which funding is pulled to build and repair highways -- was created in the 1950s. Besides the road work, its funds are used, to a small extent, for railway and other transportation initiatives.

In recent years, the trust fund has fallen far short of the government's financial outlays for transportation, said Ken Orski, publisher of the infrastructure newsletter Innovation NewsBriefs and a former transportation official in the Nixon and Ford administrations. Those shortfalls have had to be covered from the federal government's general funds, which has contributed to the nation's massive deficit.

Jill Ingrassia, managing director for government relations for the driver advocacy group AAA, said her organization generally supports the idea of funding highway improvements through gas taxes.

"AAA is supportive of the underlying philosophy that transportation should be financed by user-based funding," she said.

She added, however, that any increase in the gas tax should be combined with greater oversight.

"In our minds, any project needs to demonstrate that it is a wise investment of the resources," she said.

Phil Russo, managing director of NAFA, an organization for auto fleet managers, said his members will likely be opposed to the increase.

"My initial reaction is that I think many of my members would be up in arms about this," he said.

Many of his group's members run fleets of thousands of vehicles.

"They talk in terms of pennies and half pennies when you look to save hundreds of thousands of dollars a year," he said.

A gas tax increase is unlikely to pass, at least during this session of Congress, said Innovation NewsBriefs publisher Orski.

"My own personal judgment is that the Commission recommendation is not going to go very far in Congress given the highly conservative complexion of new Congress," he said. To top of page

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