The federal gas tax in the US is a tax on the sale of gas and diesel fuel at the pump, with revenue directed towards funding interstate highway repairs and other expenses. The tax was first introduced in 1932 and has steadily increased through various legislative acts. It is used to finance the US Highway Trust Fund, which is used for the repair and construction of new highways and roadways. There have been calls to raise the federal gas tax to replenish the trust fund.
A federal gas tax is one of several taxes levied on the sale of gas and diesel fuel at the pump. The revenue generated by the tax is usually directed to the federal or national government to fund interstate highway repairs and other expenses. States, counties and other local governments can also levy a gas consumption tax. It is important to note that the total price per gallon of gas includes, but is not limited to, the wholesale cost of crude oil, federal and state taxes, refining costs and profits, as well as distribution and marketing. Therefore, the total retail price of a gallon of gas reflects the aggregation of all the underlying costs.
In the United States, the origin of the federal gas tax dates back to the onset of the Great Depression. Like many presidents, Herbert Hoover wanted to balance the federal budget, but in 1932 he was dealing with the aftermath of a market crash and the first agonies of a decade-long economic catastrophe. Seeking to increase federal revenues, Congress passed, and President Hoover signed into law, the Revenue Act of 1932. Included in the legislation, among several other new taxes, was America’s first federal gas tax which was set at $0.01 US dollar (USD) per gallon.
Originally legislated, the U.S. federal gas tax was intended to be temporary, but in later years it was extended until it was made permanent — and raised to $0.015 USD per gallon — by the Revenue Act of 1941. Since then, the federal tax on gas has steadily increased through various legislative acts. The tax reached a rate of $0.184 USD per gallon in 1993 through the Omnibus Budget Reconciliation Act of 1993, signed into law by President Bill Clinton.
US federal gas tax revenues have been employed through various channels. It has often been used to reduce the deficit and, more importantly, to raise the US Highway Trust Fund. The trust fund is used to finance the repair and construction of new interstate highways and other roadways, and also to finance, in part, mass transit.
Public opinion has swung about the federal gas tax. In 2009, in response to rising crude oil prices, some countries such as Brazil reduced their gas tax to maintain retail prices. In contrast, there have been calls in the US to raise the federal gas tax in order to replenish the US Highway Reduction Trust Fund.
Protect your devices with Threat Protection by NordVPN
