US should hike the gas tax to help fix crumbling roads, says ex-GM vice chair

Key Points
  • Raising the federal gas tax is an investment for the economy, says Bob Lutz.
  • "We've got the cheapest gasoline in the civilized world," he says. "Nobody's even going to notice it," he says.
  • It's been more than two decades since the last federal gas tax hike.
  • American highways are on average more than 28 years old, Lutz says.
Any investment in infrastructure should include technology: Former Transportation Secretary

Repairing an aging infrastructure is worth the price of gas tax hikes, said Bob Lutz, CEO of VLF Automotive, an American-based automotive company.

"We've got the cheapest gasoline in the civilized world," Lutz told CNBC on "Squawk Alley." "A nickel here or a dime there, with the weekly fluctuations in gasoline prices, nobody's even going to notice it."

The statement came a day after President Donald Trump made his first State of the Union address, where he talked about his proposed $1 trillion to $1.7 trillion infrastructure program to rebuild America's roads, bridges and railroads that "this country so desperately needs."

Lutz, a former vice chairman of General Motors, said he, like the U.S. Chamber of Commerce, supports raising the federal gas tax in order to fund the investment. Earlier this month the Chamber promoted a gas-tax increase of 5 cents per year over the course of five years.

A tax increase of 5 cents would raise the current average price per gallon to about $2.64 for gasoline and about $3.03 for diesel, according to AAA.

Money raised from the tax is allotted to the Highway Trust Fund. But critics, including some GOP leaders, argue that not all of the money collected from the tax is actually put in the fund.

The last tax hike was in 1993, during the first year of the Clinton administration. It increased the gas tax by 4.3 cents, bringing the total tax to 18.4 cents per gallon for gasoline and 24.4 cents for diesel.

Rodney Slater, who served as Transportation secretary from 1997 to 2001 under President Bill Clinton, said money raised from the 1993 tax hike was first used to balance the budget.

It wasn't until 1997 that money from that increase was put into the trust fund and used for smart roadways and to make GPS available to civilians, Slater said Wednesday on "Squawk Alley."

"That's been 20 years," said Slater, who agreed investments in infrastructure are needed. Funds raised from the 1993 tax hike have largely been eroded, he said.

"We've gone a number of years where we've gone without investing in our infrastructure as we need to," Slater said.

That infrastructure, Lutz said, includes American highways that are more than 28 years old on average.

"A crumbling infrastructure like that, whether it's roads, bridges or whatever, is a drain on the economy," Lutz said. "It causes problems. It slows transportation, [and] it creates accidents."

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