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Replace Per-Gallon Diesel Tax With Sales Tax Proposed

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The Congressional Budget Office is projecting the Highway Trust Fund will be insolvent by the end of 2014.  Finding a way to fund the nations highways is generating some innovative proposals.  One such proposal was offered by John Horsley, executive director of the American Association of State Highway and Transportation Officials, on January 16th at the Transportation Research Board annual conference in Washington .

Horsley’s proposal is to replace the per-gallon tax on diesel and gasoline with a federal sales tax.  At a sales tax rate of 10.6% for diesel and 8.4% for gasoline, the AASHTO says the sales tax revenue would pump $350 billion into the Highway Trust Fund over six years. The current per-gallon tax and truck excise taxes would generate only $236 billion.

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