How Will Declining Gas Tax Revenue Impact Infrastructure Spending?
The U.S. Chamber of Commerce answered that question in an email last week. According to Senior Economist Curtis Dubay, fuel sales (motor gas, jet fuel, and diesel) averaged more than 14 million barrels per a day before the pandemic, but have been around only eight million barrels a day during the pandemic. That is a drop of 46 percent from early March. Dubay said, while “we do not have tax receipt data … we can come up with a rough estimate for how much revenue states are missing based on fuel sales.”
Dubay put that estimate around $4 billion and said that number “will likely grow until the economy is fully recovered, which may not be until next year.”
According to Dubay, that means “unless the federal government steps in to fill the lost revenue, states will either have to raise taxes (in fact their taxes will go up automatically because of a programmed increase in unemployment taxes that occurs when those funds are used), or cut back on spending and services.”
Those cuts would include spending for infrastructure.
The good news is that, with the help of the U.S. Chamber of Commerce, MSCI members can make their voices heard on this important issue. By clicking here, individuals can send a letter to their U.S. senators and representatives that requests Congress work together to pass long-term funding and a federal stimulus package that will help rebuild the United States and its crumbling infrastructure.
The letter notes:
- A $1 trillion investment in infrastructure can create 11 million jobs, according to Georgetown University.
- In the last year, the global ranking of America’s infrastructure dropped from ninth to 13th, according to the World Economic Forum (WEF).
- The 2019 Urban Mobility Report showed that the cost of traffic congestion (in time and fuel) is $179 billion annually.
MSCI recommends that its member company employees sign this letter as soon as possible since Congress much consider a major infrastructure investment bill before September 30, 2020.