There are no tax increases or new gas taxes proposed in a GOP-led bid to craft a bipartisan infrastructure proposal. But the plan would index the nation’s 18-cent gas tax to inflation for the first time, which would likely raise the tax over time.
Sen. Mitt Romney, a Utah Republican and one of the negotiators, told reporters in the Capitol Wednesday the gas tax indexing proposal is one of the ways the GOP wants to pay for an infrastructure package that can garner support from Democrats and President Joe Biden.
“There are no user fees that are part of the package,” Romney said. “Other than the fact that we have ongoing gas tax, for instance, and the package does propose that we index the gas tax to inflation.”
The federal gas tax is 18.4 cents for unleaded and 24.4 cents for diesel.
The gas tax would be tied to inflation by linking it to the Consumer Price Index. The CPI rose annually by 1.7% on average over the past decade, according to government statistics.
Proponents of a higher gas tax say the current taxes, which are supposed to be used to fund highway repairs, are of diminishing value, in part because they are not indexed to inflation. The federal government has not raised the gas tax in 28 years. According to the Peter G. Peterson Foundation, if the gas tax had been indexed to inflation beginning in 1993, the current gas tax would be 15 cents higher in 2021.
Republicans and some Democrats have been engaged in intensified talks this week on a “Plan B” infrastructure proposal after the White House called off talks with Republican Sen. Shelley Moore Capito of West Virginia.
Romney said he’s working on building support among GOP lawmakers and with a small group of Democrats, and if a consensus emerges, the group could begin negotiations with the White House.
As of Thursday, there was no immediate deal, Romney said, and lawmakers have not agreed on a top-line spending figure.
Biden’s latest infrastructure proposal would cost $1.7 trillion. Capito’s final offer would have provided $928 billion, although she said Republicans were willing to add an additional $50 billion.
“There is a general agreement, but it’s not locked in concrete at this stage,” Romney said. “We’re talking to individuals one by one, and so far, the folks who said they’re open to what we’re doing.”
The talks won a key endorsement on Thursday, when Senate Minority Leader Mitch McConnell said the Senate continues to seek a bipartisan deal.
“We are continuing to engage in discussions,” McConnell told Fox News. “And we haven’t given up hope that we will be able to reach a deal on something really important for the country, that we really need to accomplish, and that is a major infrastructure bill and have it done on a bipartisan basis.”
The two parties have been at odds over the size and scope of an infrastructure bill as well as the method to pay for it.
Democrats want to pay for a broad infrastructure bill by raising corporate taxes and taxes on the wealthy. Republicans have previously proposed repurposing unspent COVID aid and highway funding for a much narrower package.
Biden and other Democrats have said they oppose raising the gas tax outright.
Inflation indexing the gas tax marks the first time the GOP has shown support for raising new revenue for the infrastructure package.