Trump Signals Willingness to Hike Fuel Tax

President Donald Trump tells Bloomberg News he would be willing to consider a hike in the federal gasoline tax as a source of funds for infrastructure improvements.

The tax plan outline released last week by the Trump administration didn’t reference the fuel tax, which hasn’t changed since it was raised in 1993 to 18.4 cents per gallon from 14.1 cents. Proceeds from that increase initially went entirely toward deficit reduction, but all revenue has funneled into the Highway Trust Fund since 1997.

The federal fuel tax, which was introduced in 1932 (at 1 cent per gallon), also has been used to help pay for the Korea War, the interstate highway system and mass transit projects.

In recent years many pundits, notably former Chrysler CEO Lee Iacocca, have noted that a gradual increase in the fuel tax would encourage consumers to buy more fuel-efficient vehicles, thereby aligning buying tastes with the demands on carmakers of federally mandated fuel economy rules. But there has been little enthusiasm among legislators, who fear raising the tax would prompt strong consumer protest.