By Doug Palmer
WASHINGTON (Reuters) - A leading business group on Wednesday threw its support behind the politically unpopular idea of raising the federal gasoline tax to help fund trillions of dollars in projected U.S. infrastructure needs.
"The Chamber (of Commerce) supports reasonable increases in gas taxes that are phased in and indexed to inflation," the group's president, Thomas Donohue, told the House of Representatives Committee on Transportation.
"From a business standpoint, if you need something that's going to provide a good return, you have to go out and in invest in it and buy it," Donohue said, referring to highways and other infrastructure that make it possible to produce and move goods.
"That's why we're willing to pay more in gas and diesel taxes for something we know is going to make us more productive and efficient and lower our costs," Donohue said.
An American Society of Civil Engineers study estimates the United States needs to spend $2.75 trillion to maintain and improve its infrastructure by 2020, or roughly two-thirds more than the $1.66 trillion in expected federal, state and local government funding over that period.
The cost of failing to make those investments would be about $3.1 trillion in cumulative lost economic output by 2020 and about 3.5 million lost jobs, the study said.
A big chunk of the projected infrastructure needs are for highway projects. Those traditionally been have been funded by the federal gasoline tax, which has been about 18.4 cents per gallon since 1993 and is now seen as an increasingly ineffective way of raising revenue because of rising auto fuel efficiency.
The U.S. Chamber, which represents more than 3 million large and small businesses, supports raising the gasoline tax while continuing to look for new ways of funding highway projects in what is a tough budget environment, Donohue said.
That stance prompted Representative John Mica, the immediate past Republican chairman of the House Transportation Committee, to suggest Donohue was out of touch with his membership and to urge him to look for new work.
"Rather than focus on innovation and investment from the private sector, cutting wasteful programs and red tape, (Donohue) championed tax increases. Rather than cite vision and innovation for cost effective transportation solutions, he advocates tax increases," Mica said.
But current Transportation Committee Chairman Bill Shuster, at a forum hosted earlier in the day by the U.S. Chamber of Commerce, said all options for funding highway and other infrastructure to "to be on the table."
Shuster warned U.S. ability to compete in world markets was at risk without more money to pay for projects.
"We will reach a tipping point and the transportation system may not recover and we will fall behind the rest of the world."
Shuster said he agreed that relying on the gasoline tax probably was not sustainable over the long-term, but it would be hard to shift in the short-term to other options.
Payment systems based on "vehicle miles traveled" are unpopular, particularly proposals to put transponders in cars to record and transmit the mileage data, he said.
Former Pennsylvania Governor Ed Rendell, a Democrat, said it was "inescapable" that the federal gasoline tax had to be raised in the short term to fund highway projects.
He also advocated giving more states the ability to collect tolls on the federal interstate highway system and called for a new infrastructure bank to provide loans for projects.
(Reporting by Doug Palmer; Editing by Vicki Allen and Cynthia Osterman)
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