Bipartisan trio says tax oil to fund infrastructure

Reuters News
Posted: Jul 11, 2011 3:26 PM
Bipartisan trio says tax oil to fund infrastructure

WASHINGTON (Reuters) - Three big guns from U.S. politics are offering a twist on the chronic funding shortage for the country's infrastructure: taxing oil directly.

Former Senator Bill Bradley, former Pennsylvania Governor Tom Ridge, and former Comptroller General David Walker, said levying a tax on oil would fund transportation projects and drive down oil dependence.

"We, three leaders representing the U.S. political spectrum, recommend that a solvent transportation program be ensured through the stable pricing of oil and petroleum products as the best immediate strategy," they wrote in a report released on Monday.

Under the proposal released on Monday, the U.S. government would charge a 5 percent ad valorem tax on oil upstream, either at production or importation, when world oil prices rise. It would tax gasoline and diesel at the retail level when oil prices fall.

"This will dampen oil demand on the way up and slow price crashes on the way down," the three said.

Bradley fought Al Gore for the Democratic presidential nomination in 2000. Ridge was the first Secretary of Homeland Security under Republican President George W. Bush.

Currently, transportation projects are funded by a gas tax of 18.4 cents per gallon charged consumers at the pump.

The money frequently runs short, leaving the federal government to foot part of the bill. Meanwhile, states often cannot plan longer-term maintenance or new starts for their roads and bridges because of funding uncertainty.

Last week, the Republican leader of the House of Representatives Transportation Committee suggested a spending authorization that would limit funding to only gas tax receipt levels. Almost immediately, transportation groups, Democrats and the business community cried foul.

But no one is sure where to find extra funds, with President Barack Obama saying there will be no hikes to the gas tax as long as the economy is struggling. Proposals to charge drivers fees based on how many miles they drive have largely stalled. Privatizing existing roads, meanwhile, and leaving them to corporations for upkeep has generated political disputes at the state and federal level.

(Reporting by Lisa Lambert; Editing by Andrew Hay)