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Should Congress Raise the Gas Tax?

How Much the Gas Tax Costs You

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Gas Station

A Chevron customer prepares to pump gasoline into her car at a service station in San Rafael, Calif.

Justin Sullivan / Getty Images
Updated June 26, 2011

Americans pay a gas tax of 18.4 cents for every gallon of fuel they pump into their vehicles. The gas tax has remained level since 1993, when President Bill Clinton signed the Omnibus Budget Reconciliation Act increasing the gas tax by 30 percent or 4.3 cents, up from 14.1 cents a gallon, to reduce the federal deficit.

See also: Understanding the Ethanol Subsidy

Should Congress jack up the gas tax yet again?

Some - including leaders of the American auto industry - say Congress should increase the gas tax to as much as $1 gallon to encourage consumers to begin buying more fuel-efficient cars.

The Gas Tax Increase Argument

General Motors Co. chief executive officer Dan Akerson, for example, told The Detroit News in June 2011 that Congress should increase the gas tax instead of requiring automakers to boost fuel efficiency in their vehicles.

"You know what I'd rather have them do - this will make my Republican friends puke - as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas," Akerson told the newspaper. "People will start buying more Cruzes and they will start buying less Suburbans."

Ford Motor Co. chairman and chief executive Bill Ford Jr. has also called for an increase in the gas tax, calling it a "responsible thing to do" to discourage Americans from driving gas guzzlers.

"If the federal government really wants to encourage this kind of behavior - and they should - then that's a way they can clearly help," Ford has said.

Almost all of the revenue from the federal gas tax goes into the Highway Trust Fund, which pays for highway and bridge maintenance and new road construction across the nation.

The Gas Tax and Fuel Efficiency

President Barack Obama worked with automakers, regulators and environmentalists and was expected to propose new fuel economy standard for automakers beginning 2017 through 2025.

The proposal could mandate miles-per-gallon efficiency increases from between 3 to 6 percent every year, beginning at 35.5 mpg and ending with a standard as high as 62 mpg in 2025.

More than a dozen members of Congress including U.S. Sen. Dianne Feinstein, a Democrat from California, has said that the 62-mpg target is "technically feasible and cost-effective for consumers."

Imposition of the Gas Tax

President Herbert Hoover imposed the first gas tax, at 1 cent a gallon, in an effort to balance the federal budget. That was in 1932. The gas tax was set to expire in June 1933, but the National Industrial Recovery Act extended the tax and increased it to 1.5 cents.

The Revenue Act of 1934 rescinded the half-cent increase, according to the Federal Highway Administration. The Revenue Act of 1941 made the gas tax permanent and increased it to 1.5 cents a gallon to help pay for the country's defense buildup.

The Revenue Act of 1951 increased the gas tax to 2 cents, according to the Highway Administration, as a revenue source during the Korean War that began in June 1951.

Recent History of the Gas Tax

The most recent gas tax increases came under President Ronald Reagan, who increased the levy to 9 cents a gallon from 4 cents under the Surface Transportation Assistance Act of 1982.

President George H. W. Bush increased the gas tax by 5 cents, to 14 cents a gallon, under the Omnibus Budget Reconciliation Act of 1990. The legislation used part of the new revenue for deficit reduction.

Clinton then increased the gas tax by 4.3 cents a gallon, bring it to 18.4 cents, under the Omnibus Budget Reconciliation Act of 1993. The increase was entirely for deficit reduction, with none credited to the Highway Trust Fund.

Later, under the Taxpayer Relief Act of 1997, Congress redirected the 4.3-cents gas tax increase to the Highway Trust Fund.

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