U.S. Commerce Secretary Wilbur Ross on Thursday confirmed that President Donald Trump is open to raising federal fuel taxes, saying it's logical to charge drivers for road improvements.
Three years ago, Ross denounced calls to raise the gas tax, saying it would hurt the middle class. But he is now part of an administration faced with the challenge of funding its $1.5 trillion infrastructure plan.
Last week, Trump proposed increasing the federal tax on gasoline and diesel by 25 cents per gallon to pay for the plan, according to several sources, including Sen. Tom Carper, D-Del.
The idea has divided Republicans, many of whom worry that raising the federal fuel levy will offset the benefit of recently passed GOP tax cuts.
Asked whether he would advise the president to hike the gas tax, Ross said charging drivers for road improvements makes sense and confirmed the idea is under consideration in the Oval Office.
"The funding of infrastructure is a very key issue. There is a certain degree of logic to creating some semblance of user fees, and certainly, users of highways are one potential source for that," Ross told CNBC's "Squawk Box" on Thursday.
"Plus, a lot of states have been raising individual state gas taxes right along, so it's one of many ideas that the president is considering because there seems to be pretty good bipartisan support for the idea of infrastructure," he said.
In December 2014, Ross said raising the gas tax is a "horrible idea." At the time, members of Congress were putting forward proposals to raise the fee in order to shore up the nation's Highway Trust Fund.
In an interview with Fox Business Network, he said a 10-cent to 30-cent hike would wipe out about a third of the "huge" $60 per month in savings the middle class was reaping from lower gas prices. He said no one could predict how long gas prices would remain low.
Crude oil and gasoline prices have recovered from a three-year downturn and are currently at roughly the same levels as they were when Ross made his comments in 2014.
To be sure, the gas tax is just one possibility, Ross told CNBC after his "Squawk Box" interview. He said other options for funding road improvements include tolls and vehicle-specific charges.
"There are undoubtedly many variants, each of which has pluses and minuses," he said.
The president's Council of Economic Advisers has raised several concerns about paying for infrastructure improvement by taxing fuels, calling it an "imperfect" system in a report released on Wednesday. The council laid out a number of other options, including traditional tolls and other types of fees, that the president could consider.
Council Chair Kevin Hassett told CNBC on Wednesday the current federal gasoline tax of 18.4 cents per gallon, which has not been raised since 1993, is not designed for the 21st century. Higher fuel efficiency and inflation have eroded the purchasing power of revenues raised through the tax.
Reports that Trump was considering raising fuel taxes surfaced in May, but the issue did not resurface until the end of the year, when Gary Cohn, director of the National Economic Council, reportedly discussed it with lawmakers during conversations on an infrastructure bill.
— CNBC's Lori Ann LaRocco contributed reporting to this story.