SCOTT DETROW, HOST:
President Trump has called for a temporary suspension of the federal gasoline tax. The cost - the tax cost drivers a little more than 18 cents a gallon but waiving it carries a cost as well. NPR's Camila Domonoske joins us now to explain. Hey there.
CAMILA DOMONOSKE, BYLINE: Hi.
DETROW: All right, so a lot of people are stressing about how expensive it is to buy gas right now. But what would waiving the gas tax accomplish?
DOMONOSKE: Well, it would be a way to bring down prices at the pump pretty quickly. It wouldn't reduce them a ton, obviously, 18 cents a gallon. And some of those savings could actually wind up being eaten up by refineries and gas stations. So maybe not 100% of it would even go to drivers. But, you know, when the president floated this idea a few weeks ago, it was clearly meant to address the mounting voter frustration with how the war in Iran has pushed gasoline prices. They've recently hit four-year highs. Importantly, it would require Congress to act in order to actually suspend the gasoline tax. And we have seen some bills introduced over the last couple of months, but it is not at all clear if they'll go up for a vote, even if the president makes it a priority.
DETROW: Walk me through what the downside of this would be.
DOMONOSKE: Well, one downside is that it can actually backfire because when you reduce the cost of buying gasoline, you encourage people to buy more of it, which can actually drive prices back up. More fundamentally, though, the problem is that the money raised by the gas tax goes toward the country's highway system, and road repairs are very important for everybody who uses these highways. The thing is that the federal highway fund has actually already been running on empty for years now, and that's because - OK, are you ready for the really interesting thing about the gas tax?
DETROW: I have been waiting my whole life for the really interesting thing about the gas tax.
DOMONOSKE: The federal gas tax is broken.
DETROW: Really?
DOMONOSKE: It actually - yeah, it used to be a really good system. So if you drive more, you buy more gasoline, right? Buy more gasoline, you pay more gas tax. So the people who used highways the most paid the most for them - great setup. But this tax has been 18.4 cents per gallon for more than 30 years. And that is cents per gallon, not percent. It doesn't change as the cost of gasoline goes up.
DETROW: I never realized that.
DOMONOSKE: Yeah. And road repairs have gotten a lot pricier, obviously, in the last 30 years, right?
DETROW: Yeah.
DOMONOSKE: At the same time, cars actually got more efficient and people drive a little less per capita than we used to. So it used to bring in enough money to cover the cost of highways, but now it doesn't, not even close. And it gets worse every single year.
DETROW: I - having spent years covering politics, I think I know the answer to this, but why hasn't the federal government raised the gas tax?
DOMONOSKE: Yeah, the question is, who wants to run for office...
DETROW: Fair.
DOMONOSKE: ...On a platform of making gasoline more expensive, right?
DETROW: Yep.
DOMONOSKE: Adam Hoffer is with the Tax Foundation, and he says, yes, even though these gas taxes can work really well...
ADAM HOFFER: Nobody likes gas taxes. Politicians don't like them. Drivers don't like them. Voters don't like them. So increasing these taxes is a real political challenge.
DOMONOSKE: Now, you can do it. In fact, many states have set their state gas taxes to go up automatically. In the mid-Atlantic, it's often pegged to gas prices. Florida, it tracks inflation. And there are other benefits to having a higher gas tax. When you discourage driving by making gasoline more expensive, that has climate benefits. It means less pollution, so health benefits. But if your goal is to fund highways, there is a problem with just raising the gas tax, and that is that electric vehicles use highways but don't use gasoline. So as more people buy EVs, gas tax revenue is going to shrink even more.
DETROW: So nobody likes high taxes, but you know what else people don't like? - potholes.
DOMONOSKE: It's true.
DETROW: So what's the solution for funding highways?
DOMONOSKE: There are some alternatives. So a lot of states have some higher EV registration fees. That doesn't fill the gap, especially because there's not nearly enough electric vehicles on the road at this point. And in many cases, these actually charge EV drivers more than gas drivers pay for gas taxes. Automakers have lobbied for a fee based on vehicle weight, so trucks would pay more than sedans, for instance, that all vehicles would pay. And a lot of states have been trying road usage fees where you actually pay by how much you drive directly, whether you have a tracker or watch an odometer, so kind of like a good gas tax. The more you drive, the more you pay. Whatever it is, something needs to change, and for all this chatter about a holiday, the gas tax is actually fundamentally doomed anyway.
DETROW: NPR's Camila Domonoske, thank you so much.
DOMONOSKE: Thank you.
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