Fuel Smarts

Fuel Tax Relief Plans Being Considered

May 23, 2001

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As trucking continues to try to cope with high fuel prices, and President Bush is declaring an energy crisis, several fuel tax relief plans are floating around Congress.

The most widely introduced plan calls for suspending the 4.3-cents-per-gallon federal fuel tax for either six months or permanently. The tax was levied starting in 1993 to help pay down the federal deficit. Critics of the tax say it is now unnecessary, since the federal government is operating with a surplus.
Other plans call for repealing all federal motor fuel taxes for six months, which would equal a 24.3-cent break on a gallon of diesel and an 18.3-cents cut in the price of gasoline.
This latter plan has received the strongest opposition, mainly from road builders, who contend suspending the tax would lead to deep cuts in money collected by the federal government, which is in turn, distributed to the states to pay for road building and maintenance.
As a compromise, elimination of the 4.3-cents-per-gallon tax may be more palatable, because its elimination or suspension would not adversely affect the Highway Trust fund, used to pay for road building projects. However, previous Congressional attempts to do away with the tax have failed.
In the meantime, separate legislation that would benefit trucking’s biggest competitor has been on the table for some time. A Senate proposal would repeal the 4.3-cent motor fuel excise taxes for railroads.
Any of these proposals is most likely to get a thumbs down from the Bush administration. Transportation Secretary Norman Mineta publicly stated earlier this month that he opposes any such cuts in fuel taxes.

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