Friday, March 02, 2001

The Fuel Distributors Lobby

Interview: Barnhart still pushing point of collection change

by James A. Cooley

The Lone Star Report
Volume 5, Issue 24
Copyright 2001

Ray Barnhart spent seven years as head of the Federal Highway Administration under President Reagan. He has also been a Texas state representative and a member of the Transportation Commission.

Barnhart started a push to move the POC for federal motor fuels tax collection to the terminal rack in 1985, a goal not fully accomplished until 1994. His much-derided predictions of more than an extra billion a year in federal revenues came true. He is now trying to get Texas to adopt the same POC reforms; he says it hasn't been easy.

LSR: What do you see as the reason this proposal hasn't moved in Texas?

Barnhart: Where you have powerful lobbies, they have blocked it at the states. The reason is quite simple. In Texas, the jobbers get a 2 percent collection allowance. They also got…lag time before they have to remit that to the Treasury, so they get to use that [money].

LSR: For the regular retail sales tax, there is a .5 percent collection allowance. They [fuel distributors] get 2 percent. This is four times what everyone else gets. Why?

Barnhart: Because they are a powerful lobby, and they have controlled this for years, and the public hasn't been aware of it.

LSR: Anything other roadblocks?

Barnhart: A gentlemen at the comptroller's office [which administers the tax] actually said… that it would increase the cost of collection if you reduce the number of taxpayers – then further stated that we don't want to move and emulate the feds until we know how the feds' program is working. We know how the feds' program is working!

LSR: I had a senator with a strong transportation agenda give me the closest thing they have ever given me to a "no comment" when I asked about this issue. Why is there such a reluctance to take this up?

Barnhart: You are dealing with some exceedingly powerful lobbies and, frankly, if the public has no idea what's going on, it is political suicide to just tackle it head-on.

Let me illustrate [the stakes] with this. When Wisconsin finally moved its POC, they picked up $30 million a year. Michigan picked up $38 million a year. They made some changes in Oklahoma, and they picked up $30 million. California picked up $60 million.

LSR: Regarding the 2 percent fee, they are getting a deal four times better than the other taxpayers in the state – and it is coming not only out of our roads, but our schools. How is this defended?

Barnhart: I haven't been able to get anybody to defend it. They won't talk about it. O

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