LEGISLATION PROPOSED TO TAX FREIGHT FOR FUNDING NEGLECTED INFRASTRUCTURE

There is little dispute that the United States infrastructure is in need of significant repair and upgrading, however the means to fund such projects has been unclear and disputed for years. A fixed amount federal excise tax on gas and diesel fuel has been the primary source of infrastructure funding for a long time, but these taxes have not been raised since 1993 and are no longer sufficient. With vehicles becoming more fuel-efficient and the increased inflation, the revenue generated per highway mile is decreasing, resulting in continued inadequate funding.

According to a study by the American Society of Civil Engineers (“ASCE”), the costs of failing to address infrastructure deficiencies are significant: From 2016 to 2025, each household will lose $3,400 each year in disposable income due to infrastructure deficiencies; and if not addressed, the loss will grow to an average of $5,100 annually from 2026 to 2040, resulting in cumulative losses up to almost $34,000 per household from 2016 to 2025 and almost $111,000 from 2016 to 2040 (all dollars in 2015 value).

Over time, these impacts will also affect businesses’ ability to provide well-paying jobs, further reducing incomes. If this investment gap is not addressed throughout the nation’s infrastructure sectors by 2025, the economy is expected to lose almost $4 trillion in GDP, resulting in a loss of 2.5 million jobs in 2025.

On June 22, 2017 U.S. Representative Alan Lowenthal (D-CA) introduced the “National Multimodal and Sustainable Freight Infrastructure Act”, H.R. 3001, in an effort to solve this problem. Amongst other provisions, Lowenthal’s bill would impose a 1 percent excise tax on ground transportation of freight, payable by the party paying for the freight transportation. The tax would apply to transportation of property by “freight rail” or “truck trailer and semitrailer chassis and bodies, suitable for use with a trailer or semitrailer which has a gross vehicle weight of 26,000 pounds or more.”

The bill, which includes provisions for a grant program, would deposit all revenue into a freight trust fund, and a lock-box feature would ensure the money is used only for designated purposes for freight moving by truck and rail. Cargo interests have long petitioned Congress for a dedicated source of revenue to upgrade highways, bridges, rail and inter-modal connectors that carry heavy concentrations of commercial traffic on key routes considered regional and national economic pipelines. Although many appear to be in agreement that something must be done to provide adequate and permanent funding for infrastructure, similar attempts in the past have failed.

Visit https://www.congress.gov/bill/115th-congress/house-bill/3001/text to view the text of the bill.

Visit https://www.infrastructurereportcard.org/wp-content/uploads/2016/05/2016-FTA-Report-Closethe-Gap.pdf to view the ASCE report.