…it’s called a “fuel tax” and it is a “user fee” tp be paid by the railroads themselves…
To recap, several Amtrak supporters (including TRAINS own Bob Johnston) are calling for “federal investment” in the rail grid that would be matched by the states and private freight railroads. Most of us take this to mean that either the federal general fund will be raided to pay off the lack of private infrastructure investment by the Class I’s, or the highway trust fund will be raided for this purpose.
Highway users pay an 18.4 cents per gallon federal fuel tax (on top of each state’s own fuel tax). If you really want federal investment in the private proprietary rail infrastructure so that Amtrak’s true revenues can be further buried Enron-style, then what we need is an equivolence to highway funding. So let’s raise the federal fuel tax for railroads to 18.4 cents per gallon and allow the “state matching funds” to also be a fuel tax on railroads. That way, we the taxpayers aren’t being duped to subsidize the Class I’s.
An 18.4 cent per gallon fuel tax on railroads is the perfect way to pay for the infrastructure improvements to the nation’s rail grid desired by Messrs. Gunn and Johnston that the Class I’s themselves are loathe to do themselves. Better yet, let’s raise it to 50 cents a gallon and use part of the money to rebuild abandoned rail lines that are deemed essential to local economic development, and use other parts of the money to compensate state and local highway districts whose roads are experiencing increased wear and tear from increasing truck traffic that has resulted from branchline abandonments or just plain refusal of service.
I expect the AAR to support this proposal, as they are currently running an ad campaign expousing the railroads’ ability to take trucks off our highways. Of course, that ad is a bunch of BS, as all the railroads have done lately is to put more and more trucks ON the highways (via abandonments, terminal consolidations,
That’s not the worst idea I’ve heard. It sounds like a good idea. The only problem is that the general cost of fuel really should be capped at a fair price as to be exceptable enough for both oil companies and consumers.
For starters, it might be nice if the revenue from the 4.3 cent per gallon fuel tax paid by railroads was earmarked for railroad projects, instead of going to the general fund for “debt reduction”.
sure, raise the fuel tax on the railroads and guess what they do, thats right, fuel surcharge, who pays that? correct again, that same guy who wants the fuel tax raised, viscious circle aint it?
OK, I will be the guy who goes the other way on this one.
Given what I understand about government subsidies (either direct or indirect) to highway and river transportation, I think the plan merely levels the playing field and is a good idea.
Gabe
P.S. Given the fact that railroads haul more freight now than they ever had in the past, might there be more than one way of viewing the contention that railroads put more trucks on the highway?
I disagree with that. I would not compare Amtrak to Enron. Enron’s management were strong supporters of GWB. Besides, Enron buried expenses, not revenues.
Nothing any more ‘viscious’ than in any other business-taxation arrangement. It’s been SOP to try to pass along additional taxation, with appropriate margin increases, to “consumers” whenever possible. The principal problem this entails would be commodity shift between modes (see the contemporary thread about grain traffic and pricing for an example) if the ‘adjusted’ price fell above a logical threshold for another modality, or if a railroad unable to pass the full incremented amount of the tax to its shippers decided instead to curtail service or impose onerous conditions.
Where I see the problem is in the allocation and distribution of the proceeds. It’s bad enough with the Highway Trust Fund allocations, which are for interstate commerce with almost entirely ‘free’ open access to intrastate residents with appropriate vehicles. Someone on this forum quite recently commented on complaints that some states aren’t getting their ‘fair share’ out of the HTF disbursements. How will the several states allocate ROW improvements for railroads that may be heavily capitalized in one state, but have a predominant traffic base in others? Or that burn proportionally more fuel in a given state, but don’t maximize revenue or operational priorities there?
I raised the issue of allocation of the ‘deficit reduction’ tax a short time ago, and it was pointed out that the amount would be woefully inadequate for many purposes. Even at four times that level, the absolute amounts aren’t going to cover very much allocation… which starts raising the stakes for states that want a bigger piece of the pot.
I would dearly love to see a legal argument that attempts to claim that ‘branchline abandonment’ is the proximate cause of increased truck traffic on rural roads! I think you’ll almost always find it’s the other way around: increased truck utilization led to uneconomic utilization of unsubsidized branch lines. Using state money to fund retention of granger lines (as done in Washington s
I second fuel tax model! I’m not a fan of “mode warfare”. The most worthy projects regardless of mode should get the moola. In fact, the overall transportation network design in the US should be geared toward seamless movement between modes. ISTEA got some of the way there, but is really a drop in the bucket.
Is there any reason why high speed rail shouldn’t be integrated into the air and highway network, for example?
I apologize. I should not have compared Amtrak to Enron. At least Enron actually was a profitable company at one time before they imploded. Amtrak never has, and never will before its predictable implosion some time in the near future. So again, to all you Enron folk out there, I sincerely apologize for degrading your corporate name by comparing you to Amtrak, although it seems both entities employ(ed) the same accounting firm!
BTW, Enron was also a big corporate supporter of the Clinton Administration. In fact, didn’t Ken Lay stay a few times at the White House on the invitation of Bill Clinton? Not sure if Monica was invited as a “third wheel”…
Better that the rail users pay for improvements to railroad infrastructure than those who don’t use rail service. That is the essence of a user fee: SUPRISE!! It’s the user of the service who pays the user fee, not the non-user. What a great concept!
The point is this: Railroads are loathe to put too much into infrastructure improvements lest they fall behind their other Class I counterparts in the contest to see who has the sexiest stock price/dividend. With an accross the board federally mandated 18.4 cents per gallon paid by all railroads, in essence the issue of infrastructure improvements is taken out of their hands and equalized among all railroads, that way no one’s stock price suffers in comparison to the others everytime one of them decides it’s time to undefer the maintenance.
Enron’s auditor was Andersen, which itself imploded after the Obstruction of Justice determination which essentially put them out of business.
Amtrak’s auditor was (and I think still is) KPMG. Recall in 2002 KPMG issued a “management letter” to Amtrak that cited Amtrak’s precarious financial position. This prevented Amtrak from borrowing in the capital markets; Congress later worked out a stop-gap solution to keep Amtrak running.
I don’t think anyone seriously ever expected Amtrak to be profitable in the true financial sense, despite the occasional political [censored] that was spoken.
The railroads should not be paying any fuel tax, including the 4.3 cent deficit reduction which goes to the General Fund! The reason there is a highway tax is to pay for some of the costs of building and maintaining highways, the benefits of which go to the users of the road.
The worst possible thing to do is to tax the railroads more!
How can anyone be so ignorant as to propose such things. Higher taxes on railroads will tend to shift traffic away from the railroads. Higher taxes on trucks, which is what we should be doing, will tend to shift traffic toward the railroads.
The reason the railroads are in the shape they are in is because of almost a century of unremitting hostility by Federal and State Governments. Think rate regulation, which froze rates in an inflationary period (1906-WWI), and prevented competitive responses post WWII, and massive ifrastructure subsidys to all competing modes for the entire 20th century.
Congress has passed the 2004 tax package and it calls for a phase out of the fuel tax on railroads by 2010. It follows the White House proposal and will be signed by the President.
Manipulating funds to Amtrak.Is’nt Amtrak already receiving highway funds here in California?Most of the advertisment with Amtrak is with Cal-Trans.
That’s using our highway funds.Somehow ,somewhere,something isn’t
right.And when you see Mr.Gunn,He came through here in Glendale Wednesday with # 14 going to Seattle.Please tell him to put a Amtrak Ticket Agency back here in Glendale.If and when they add those 14 new Surfliners
we sure could use it . Dave Br.
The reason amtrak can’t make money is because they provide lousy service at high prices, namely because they get low federeal subsidies compared to the airline industry and the interstate highway system. PRivate automobiles and all that’s needed for their maintenance, upkeep (road mainenance, ambulance service for the 44,000 people a year who die in car accidents, etc.) cost catastrophically more than railroads. Plus we live in America, which has been conditioned to sacrifice their b^lls for the luxury of the private automobile. Yes, I admit, I don’t appreciate cars much. Can you tell?