Washington (Platts)--15Jan2008

The US government should raise the federal gasoline tax by as much as 40
cents per gallon over the next five years to raise money to repair
deteriorating highways, bridges and other parts of the transportation system,
a congressionally chartered commission said on Tuesday.

The gas tax proposal is part of a long-awaited report by the National
Surface Transportation Policy and Revenue Study Commission, which Congress
created in language included in a major 2005 transportation law.

In its recommendations, the commission said Congress should consider
increasing the gasoline tax by 5 cents to 8 cents per gallon annually over the
the next 5 years. The tax could continue to increase after that based on the
rate of inflation, the report said.

Jack Schenendorf, the commission's vice chairman, said raising the
gasoline tax is the "most effective way" to bankroll much-needed repairs to
the US transportation system.

"There is no free lunch," Schenendorf said at a Washington news
conference. "There is no way to accomplish what we're talking about without
raising money."

Schenendorf acknowledged that boosting the gasoline tax would be a tough
sell in Congress and is unlikely to sit well with many American consumers, who
are already paying well over $3 per gallon for gas. Under the commission's
proposal, the cost of gasoline for the average American motorist would
increase by 41 cents to 66 cents per day, Schenendorf said.

He sought to downplay the significance of the proposed increase, calling
it "less than the cost of a candy bar" and a fifth of the cost off a cafe
latte." The tax hike would be "a small price to pay for the benefits" that it
would deliver, Schenendorf said.

The notion of raising the federal gasoline tax to revamp the
transportation structure gained some support in Congress last summer, when an
when an eight-lane bridge in Minneapolis collapsed into the Mississippi River.

Even some business groups that have long opposed tax increases, such as
the US Chamber of Commerce, embraced the idea. But President Bush quickly
rejected the notion, saying Congress should "revisit the process by which they
spend gasoline [tax] money in the first place."

--Brian Hansen, brian_hansen@platts.com