Boxer Proposes Eliminating, Replacing Fuel Tax

The chairwoman of the Senate committee that will write the next highway bill said she wants to end the per-gallon federal fuel taxes Americans pay at the pump.

Sen. Barbara Boxer (D-Calif.) said the alternatives could be a tax at the refinery level, a wholesale tax on oil distributors or sales taxes.

“There are many ideas out there, and the one that I’m leaning toward myself . . . is to be able to do away with the per-gallon fee at the pump and replace it with this sales fee as they’ve done in Virginia and Maryland, and it would fund the entire highway program for . . . six years,” Boxer said Sept. 25 at a hearing on highway funding by the Environment and Public Works Committee.

As Boxer pointed out, the Finance Committee, not EPW, will make the decision on any tax changes. However, there are many “exciting” ideas out there to replace the per-gallon tax, she said.

In addition to oil and sales taxes, she mentioned a carbon-pollution tax, which she said is controversial with some people but not with her.

Virginia and Maryland this year attracted the attention of many policymakers when they approved transportation funding plans that rest on a combination of new sales and wholesale taxes on oil distributors.

In both states, a portion of the new levies are indexed to rise with inflation. Several speakers at the hearing said they supported such indexing, as the failure to increase gasoline and diesel taxes has caused them to lose much of their buying power.

The hearing focused on how to fund transportation long term. The Highway Trust Fund, which supports highway building and maintenance, is projected to be insolvent by the start of Fiscal 2015.

Congress has been supplementing the fund for years with transfers from the general fund, a practice Boxer said is coming to an end. Lawmakers have been wrestling with how to reduce the deficit and end sequestration, the series of automatic budget cuts.