Amidst discussions about infrastructure and the price of gasoline, Obama’s administration has called for an increase in transportation spending. But where exactly the money will come from to fund this increase is unclear:
[Transportation Secretary Ray LaHood] said Obama is not in favor of raising the gas tax in a “lousy economy.”
The new tax would be necessary, in part, because the gasoline tax used to fund the highway trust fund is collecting less revenue than projected due to increasing fuel efficiency.
The exchange between Sessions and LaHood degenerated into a shouting match, with the Transportation secretary emphasizing that infrastructure can be improved and jobs created while paying down the debt.
This is one negative consequence of increased fuel efficiency: less gasoline will be purchased so without a gas tax increase, revenue from this source falls. This might call for some new ways to derive tax revenue from driving. How about more tolls? Or taxing drivers per mile driven?