Rep. Jared Huffman Introduces New Bill to Replace Gas Tax, Ensure Solvency of Highway Trust Fund, Fight Climate Change

January 13, 2015

WASHINGTON­—Congressman Jared Huffman (D-San Rafael) today introduced the Gas Tax Replacement Act of 2015, new legislation to stabilize the Highway Trust Fund— which funds transportation projects across the United States. The Gas Tax Replacement Act would replace the chronically-underperforming federal gas tax with a life-cycle assessment-based carbon tax on gasoline and diesel fuels that will accurately reflect the carbon emissions of the fuel.

“While the strides we have made for vehicle fuel efficiency has saved consumers millions of dollars at the pump, the antiquated and inflexible federal gas tax has left our nation’s transportation infrastructure demands unmet,” said Huffman, a new member of the House Transportation & Infrastructure Committee.

“The Gas Tax Replacement Act would take our nation in a bold new direction and stabilize the chronically-underfunded Highway Trust Fund, which states and municipalities rely on to repair crumbling roads and bridges, expand transit rail service, and support a growing economy. Further, the Gas Tax Replacement Act would help spur advancements in clean energy technology, reduce carbon pollution, and fight climate change here at home and abroad.

“We cannot keep kicking the can down the road and relying on a transportation funding mechanism that predates the construction of the Interstate Highway System—it’s time for a new direction.”

Excise taxes into the Highway Trust Fund currently come from an 18.4 cent-per-gallon tax on gasoline and a 24.4 cent-per-gallon tax on diesel fuels. The gas tax has been the primary source for federal transportation projects since the 1950’s.

Any change to the federal gas tax requires an act of Congress, leaving the Highway Trust Fund at the mercy of political gridlock. As such, the federal gas tax hasn’t been updated in 20 years and has routinely faced insolvency. In 2014, the Highway Trust Fund nearly went insolvent, requiring Congress to pass a short-term fix stabilizing the fund.

The Highway Trust Fund will again begin to face shortfalls in May 2015, with the estimated funding gap expanding to almost $20 billion annually by 2023.

California depends on the Highway Trust Fund for roughly 48.1% of its state transportation budget.  California received $4.04 billion in fiscal year 2009, $3.99 billion in 2010, $3.94 billion in 2011, and $4.13 billion in 2012.  The greater San Francisco-Oakland metropolitan area receives $292,964,961 in annual funding for both highway and transit funding.

The new carbon tax would replace the federal gas tax and be applied to surface transportation fuels, based on a life-cycle assessment of carbon emissions.

The Environmental Protection Agency (EPA) would develop life-cycle assessments, also known as “well-to-wheel,” for different sources of crude oil, biofuels, and other inputs into gas and diesel fuels for surface vehicle transportation. EPA already conducts these assessments for biofuels, and the California Air Resources Board has developed these assessments for a wide range of fuel sources. This life-cycle assessment would be used to calculate the total emissions, not just from fuel combustion within the vehicle but also during the production and extraction process.

Emissions would initially be taxed at $50 per metric ton of carbon dioxide emissions, with the EPA allowed to adaptively manage this rate to ensure sufficient funding in the future.   

The full text of the bill can be found here.

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