On Monday July 23, 2018, retiring House Transportation and Infrastructure Committee Chairman, Rep. Bill Shuster, released a discussion draft of an infrastructure bill, otherwise known as a highway bill. While there is little chance of this bill passing this year or next, it is meant to set the boundaries of the debate as Congress looks to a 2020 expiration date of the FAST Act (the last infrastructure bill).
What important highlights of the bill do supply chain professionals need to know?
Curtain call for the gas and diesel tax
Chairman Shuster wholeheartedly recognizes that the gas and diesel tax will remain a viable funding mechanism for the next decade. His bill proposes a $0.15 per gallon increase in the gas tax and $0.20 per gallon increase in the diesel tax, phased in over three years.
These increases would be maintained for 10 years and abruptly end. In the meantime, a serious effort will be made to fully test a per mile fee (formerly known as a vehicle miles tax or VMT) through the establishment of a robust voluntary pilot program.
C.H. Robinson’s President of Managed Services, Jordan Kass, testified on possible funding mechanisms in March 2018 before the Senate Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security. He encouraged the use of the gas and diesel tax as “a bridge to buy time to get to a VMT,” which is exactly what this discussion draft proposes.
Taxing alternative fuels
While relying on the gas and diesel tax, virtually all other forms of propulsion are taxed as well. Federal taxes are proposed for batteries for hybrids and even on bicycle tires to ensure that all who use our transportation system contribute.
What’s not included in this version of the discussion draft?
This draft is primarily about generating discussion on the big issue of how to pay for infrastructure.
Controversial other provisions, like increasing truck size and weight or lowering the federal truck driver age, are excluded simply because they could distract from the primary issue that has held up any infrastructure bill for the last two years: funding.
We’ve seen several proposals in recent years for funding, including using repatriation of foreign profits (that was used in corporate tax reform to lower the overall corporate rate) and even a barrel tax on oil.
Many of these related transportation policy issues (like lowering the driving age) will likely have to wait until they can be attached to a broad infrastructure bill in 2020.
What are the next steps for the infrastructure bill?
The Fast Act expires in September 2020, so this discussion draft will now clearly become the basis of that bill.
A similar process to this played out with tax reform. Former Chairman, Rep. Dave Camp, released a discussion draft when it was clear his version of tax reform would not make it through Congress back in February 2014. While there were many changes to the Camp draft, tax reform passed in December 2017.
So when a transportation bill gets passed in 2020, remember that Chairman Shuster proposed a curtain call for the gas and diesel tax before a transition to a per mile fee.
Additional resources to learn more about the infrastructure bill
If sifting through the entire bill isn’t your idea of fun, here are a few more ways for you to stay informed.
- I highly recommend looking at the summary of the bill.
- Robyn Boerstling, vice president of Infrastructure, innovation, and human resources from the National Association of Manufacturers wrote a helpful blog post on the topic, too.
- In addition, comments from Ed Mortimer, the vice president for transportation infrastructure at the U.S Chamber of Commerce, were interesting to read.
Of course, we will provide updates on this topic as they become relevant to our industry. Subscribe to Transportfolio to be notified when updates are available.