Feb. 8 (Bloomberg) -- A U.S. Senate committee sent a highway-funding bill to the full chamber after backing away from proposals to increase gasoline taxes and force early distributions on some individual retirement accounts.
The Democratic-controlled Senate’s finance committee yesterday approved the legislation, 17-6. Chairman Max Baucus, a Montana Democrat, said he will look for additional money, without providing details. The Senate public works committee previously approved a two-year, $109 billion spending plan.
“This bill doesn’t get the job done and we know it doesn’t get it done,” Senator John Kerry, a Massachusetts Democrat, said while voting for the bill. Kerry has co-sponsored a bill, championed by President Barack Obama, to create a U.S. infrastructure bank.
Senator Mike Enzi, a Wyoming Republican, withdrew an amendment to raise the U.S. gasoline tax by indexing it to inflation, which was supported by Senator Tom Coburn, an Oklahoma Republican. The gasoline tax, which has been 18.4 cents a gallon since 1993, raises most of the money spent by the U.S. Highway Trust Fund on road construction.
The tax would be 18.9 cents a gallon this year if indexed for inflation, Enzi said. “That is not much of an increase, but it would be enough to fund what we need now,” Enzi said before the vote.
Obama and Republicans in Congress have said they oppose an increase even as the Congressional Budget Office forecasts the trust fund’s highway account may be unable to meet its obligations as soon as October. The U.S. Chamber of Commerce, the largest business lobby, and Obama’s deficit-reduction commission recommended increasing the tax by 15 cents a gallon.
The finance committee must find about $30 billion over two years to cover the bill’s proposed spending, according to the CBO. The committee proposal would transfer certain tariff revenue to the Highway Trust Fund, close tax loopholes related to alternative-energy credits and use penalties levied against some low-mileage vehicles.
Baucus proposed raising $4.6 billion over the next decade by requiring younger beneficiaries of inherited IRAs to pay taxes over five years instead of spreading them over their lifetime. Financial advisers and tax lawyers said Baucus’s proposal would have significantly altered retirement and estate planning.
“IRAs were meant to be used for retirement,” Baucus said. “The inherited IRAs are being used not as a retirement tool but more like an estate-planning tool.”
The House transportation committee approved a five-year, $260 billion spending plan last week. It would rely partly on money raised by expanded domestic oil and gas drilling. The House Ways and Means Committee approved a revenue measure that would take the share of gasoline-tax revenue dedicated to mass transit and spend it on highways and bridges.
The Senate transportation bill is S. 1813. The House version is H.R. 7.
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