ILMA Compoundings June 2019 - 5

LETTER FROM THE CEO

It's Time to Invest in Infrastructure

I

f there's anything that Americans agree on, it is the fact that roads, bridges, airports and seaports are critical assets, crucial to
our nation's economy. President Donald Trump has proposed investing $2 trillion in infrastructure. While few details about
the plan have emerged, the concept has drawn strong bipartisan support.
ILMA members have indicated their support for investment in infrastructure over the last three years through our advocacy
survey. The issue was ranked as a top concern, as members undoubtedly need to move their products from plants
to customers safely and efficiently.
Of course, the sticking point will be how to pay for it. No surprise, the Democrats urged raising taxes on the wealthy,
which the president is likely to reject. Taxing the "wealthiest 1 percent" is the left's answer to paying for everything from
student loan forgiveness to health care and pre-kindergarten. This proposal is unlikely to advance to square one.
Funding infrastructure with income taxes is a radical departure from the user-fee concept that has efficiently and effectively
funded infrastructure for decades. The federal fuel tax was first implemented at a rate of 1 cent/gallon in 1932. It was last
increased in 1993, to the current rate of 18.4 cents/gallon on gasoline and 24.4 cents/gallon on diesel, despite inflation
increasing costs by 73% from 1993 to present day.
Though it is questionable that either party has the will to propose it, it's time to consider phasing in a fuel tax increase. The
American Trucking Associations, a group representing one of the largest consumers of fuel, has begged Congress to move on the
fuel tax. The U.S. Chamber of Commerce supports a 25-cent increase of the federal fuel tax. It's a concept that is gaining traction
at the state level. Faced with deteriorating roads, 28 states have increased their own state fuel taxes over the last five years.
However, there's a strong argument that the fuel tax is outdated. In the era of increasing fuel efficiency, hybrids and electric
vehicles, it may be time to move away from the fuel tax to a tax on miles driven, also known as the Vehicle Miles Traveled
(VMT) tax. The VMT tax would tie a driver's taxes to his or her use of the roads. Electric vehicles use the roads just like
gasoline-powered vehicles but currently pay no taxes to do so. Several states, including Oregon, California and Colorado, have
experimented with the VMT tax. House Transportation and Infrastructure Chair Rep. Peter DeFazio (D-Ore.) has proposed a
national demonstration project of the VMT tax.
It's a positive development that there's discussion about our nation's infrastructure and a healthy debate about funding.
Whether Congress can move beyond talk remains to be seen.

Holly Alfano
Chief Executive Officer

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ILMA Compoundings June 2019

Table of Contents for the Digital Edition of ILMA Compoundings June 2019

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