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The White House report says despite higher administrative costs, “the economic arguments in favor of using toll revenues ... are solid.” (File photo)

White House report critical of fuel tax, questions if truckers are paying enough

Council of Economic Advisors says "heavy trucks in particular do not currently face taxes and charges that are aligned with the negative externalities they generate."

A new economic report from the White House downplays the effectiveness of fuel taxes, and questions whether truckers are paying enough under the current system.

“Evidence suggests that heavy trucks in particular do not currently face taxes and charges that are aligned with the negative externalities they generate, which include pavement damage, traffic congestion, accident risk, and emissions. Even excluding emissions, these external costs are significant,” said the Annual Report of the Council of Economic Advisers.

The White House included the report as part of its “Economic Report of the President” delivered to Congress and published online Feb. 21. It was issued a week after President Trump sent his infrastructure funding outline to Congress that called for a bill that will generate at least $1.5 trillion over 10 years.

Kevin Hassett, chairman of the Council of Economic Advisors, discusses the report at the White House briefing on Feb. 22. (YouTube)

Though the outline left many of the details for Congress to sort out, Trump made headlines after suggesting he would back a 25-cent hike in federal fuel taxes.

However, the White House report said fuel taxes “fail to encourage efficient use of existing roadways and to signal the value of any potential additional capacity.”

The report looked more favorably on tolling, public-private partnerships, and a tax on vehicle-miles traveled (VMT).

Despite higher administrative costs of toll systems, “the economic arguments in favor of using toll revenues to pay for roads and highways are solid,” according to the report.

It said P3s can decrease financial risks of large projects by more efficiently utilizing available capital, though success depends “on coordination and shared responsibility among multiple entities.”

It also called for considering “innovative” ways to supplement or replace fuel taxes with a user fee. It cited the VMT pilot in Oregon as an example of a program that “can increase efficiency and raise needed revenues to pay for infrastructure improvements and additions to capacity.”

The report estimated a VMT tax on commercial trucks would raise $43 billion in tax revenues. It added there are greater efficiency benefits when the VMT tax is higher in urban areas than in rural areas.

Though the Oregon program was only a small pilot, “it has given policymakers some real experiences on which to base future policy and program decisions.”

The report also backed up Trump’s beliefs that states and local governments are more critical than the federal government on funding, and recommended efforts to ensure states contribute more funding for every federal dollar provided than they do currently.

The more than 550-page document was fairly light on references to freight transportation – the majority were related to waterways or examples of user fees on commercial vehicles in foreign nations.

American Trucking Associations has been seeking support for its “Build America Fund” that includes a user fee built into the price of wholesale transportation fuels collected at the terminal rack, phased in at a nickel per year over four years. The group offered a cautious reaction to the local emphasis on funding decisions.

“It is important to get state and local input on important infrastructure projects, but our system of highways and bridges is a national network and that requires a national solution and coordination between states. The federal government has always had an important role to play in planning and, more importantly, funding our infrastructure and as an interstate industry, we firmly believe that role should continue," ATA said in an e-mailed statement.

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