Commission Report Recommends 25 Fuel Tax, Use of Customs Duties, to Fund Surface Transportation System

(The Safe, Accountable, Flexible, and Efficient Transportation Equity Act - A Legacy for Users (SAFETEA-LU) established the Commission and required it to, among other things, conduct a comprehensive study of the current condition and future needs of the surface transportation system and recommend short and long-term sources of revenue.)

Annual Investment of $225 Billion Needed Each Year, for Next 50 Years

In its report, the Commission states that the U.S. needs to invest at least $225 billion annually from all sources for the next 50 years to upgrade the existing system to a state of good repair and create a more advanced surface transportation system to sustain economic growth.

In addition, the Commission recommends replacing all current Federal surface transportation programs; creating an independent commission to oversee development of a national strategic plan for transportation investment; making investment subject to both cost-benefit analysis and performance-based outcomes; and ensuring that each project is designed, approved, and completed quickly.

Recommended funding sources include:

Minimum 25 Rise in Fuel Tax in Five Years

The Federal fuel tax should be increased from 5 to 8 cents per gallon per year over the next 5 years (a 25 to 40 cent rise in five years), after which it should be indexed to inflation. When adjusting Federal fuel tax rates, the Commission also recommends that tax rates on existing Federal truck taxes be adjusted proportionately to maintain the current allocation of highway cost responsibility.

Federal Freight Fee

A Federal freight fee should be levied to help finance freight-related improvements as part of an overall freight program. The Commission states that Congress should create an accountable and transparent programmatic linkage between an assessed freight fee and the selection and funding of projects that facilitate increasing volumes of primarily trade-driven freight.

The payers of such a fee must realize the benefit of improved freight flows resulting from projects funded by the freight program. Such a fee should be designed to ensure that commerce is not burdened by local and State proliferation of such fees; no mode of transportation or port of entry is disadvantaged; and the ultimate consumer bears the cost.

Use of a Portion of Customs Duties

The Commission states that another potential revenue source for funding freight-related improvements is a share of the Customs duties paid on all imports. If 5% percent of Customs duties were dedicated to freight transportation improvements, revenues would be approximately $1.8 billion per year, which is equivalent to a fuel tax increase of about one cent per gallon. Because of the large transportation requirements associated with imported commodities, the Commission recommends that a portion of Customs duties be dedicated to help pay the costs of freight-related improvements.

Highlights of the Commission's Recommendations

The following are highlights of the Commission's recommendations (partial list):

• An independent commission should be created to oversee development of a national strategic plan for transportation investment and to recommend appropriate revenue adjustments to the Congress to implement that plan;
• Program and project development processes should be reformed to reduce the excessive time required to move projects from initiation to completion;
• A national freight transportation program should be created that would implement highway, rail, and other improvements to eliminate chokepoints; and
• The current Federal surface transportation programs should not be reauthorized in their current form. Instead of the current 108 programs, Federal surface transportation investment should be concentrated in the following 10 program areas:

(1) Rebuilding America: A National Asset Management Program;

(2) Freight Transportation: A Program to Enhance U.S. Global Competitiveness;

(3) Congestion Relief: A Program for Improved Metropolitan Mobility;

(4) Saving Lives: A National Safe Mobility Program;

(5) Connecting America: A National Access Program for Smaller Cities and Rural Areas;

(6) Intercity Passenger Rail: A Program to Serve High-Growth Corridors by Rail;

(7) Environmental Stewardship: Transportation Investment Program to Support a Healthy Environment;

(8) Energy Security: A Program to Accelerate the Development of Environmentally - Friendly Replacement Fuels;

(9) Federal Lands: A Program for Providing Public Access; and

(10) Research, Development, & Technology: A Coherent Transportation Research Program for the Nation.

"Transportation for Tomorrow: Report of the National Surface Transportation Policy and Revenue Study Commission" (dated December 2007) available at http://www.transportationfortomorrow.org/final_report/