Gasohol tax break could cost roads, bridges $20 billion

News ARTBA March 24, 2003
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Federal tax and energy policies aimed at increasing motorist use of ethanol-blended motor fuels like gasohol are negatively imp


Federal tax and energy policies aimed at increasing motorist use of ethanol-blended motor fuels like gasohol are negatively impacting federal and state efforts to improve the nation's highways and public transportation systems, the American Road & Transportation Builders Association (ARTBA) told a congressional subcommittee.


Richard Wagman, first vice chairman of the group, told the Senate Subcommittee on Clean Air, Climate Change and Nuclear Safety, the 5.2-cent per gal tax incentive for ethanol-blended fuel and the current 2.5-cent per gal of the gasohol excise tax now being deposited into the General Fund rather than the Highway Trust Fund will reduce potential user revenue to the HTF by $21.5 billion by 2012.


Wagman, chairman and chief executive officer of G.A. & F.C. Wagman Inc., a highway and bridge construction firm based in York, Pa., pointed out $21 billion could build one lane of interstate-grade highway from New York City to San Francisco and back. Federal highway investment will total just over $30 billion this year.


Federal funding for state and local road and bridge improvement programs is financed through the collection of user fees, primarily motor fuel sales excises, paid by motorists and truckers.


"A car powered by ethanol-blended gas does the same damage to the road as a car powered by straight gasoline," Wagman noted. "The user-fee rate on the sale of gasohol should be the same as the user-fee rate on gasoline. Otherwise, we are just shortchanging the nation's road improvement program."


The proposed federal renewable fuels standard now circulating in Congress, which would mandate that gasohol become available for sale in all states in increasing amounts each year, would further exacerbate the highway funding problem, Wagman said. The new mandate alone would reduce potential trust fund income by more than an additional $1 billion per year by 2012.


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