Should Higher Gas Mileage Come With Higher Gas Taxes Too?

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41Cent Gas Pump

41Cent Gas Pump

We do a mix of articles here at GreenCarReports, writing both about cars--green, and occasionally not so green--and some of the broader automotive issues that affect our environment.

We were struck by an article last week from The Hill, which covers DC politics as obsessively as we cover high-mileage, low-emissions cars and trucks. Its topic was the always controversial, always loaded, perennial hot button of energy politics: a gasoline tax.

It suggested that Representative Jim Oberstar (D-MN), chairman of the House Transportation and Infrastructure Committee, was making Democratic leaders nervous by floating a proposal to raise the Federal gasoline tax to cover an increase in transportation funding from $324 billion to $450 billion or more.

Repairing roads, bridges, and highways

The bipartisan National Surface Transportation Infrastructure Financing Commission panel recently called for a 10-percent increase in the Federal gasoline tax (e.g. less than 2 cents per gallon) to cover an estimated $400 billion shortfall in funding for street, bridge, and highway repairs between now and 2015.

It's basic economics that as the price of a resource rises, usage falls and/or efficient use rises. Pricier gasoline, fewer miles--or the same number of miles in more efficient cars.

Or as famed auto industry analyst Maryann Keller told The New York Times, “Gasoline prices motivate behavior.”

And as many recent articles have noted, when gasoline hit $4/gallon just as economic recession started to bite, the two factors together cut road travel in the US during 2008 by a stunning 3.6 percent, or 108 billion vehicle miles--far more than either the 1973 or 1979 oil crisis.

Gasoline has lately risen to a national average price of $2.62/gallon,  from a low last year of $1.62, but even that rise doesn't reflect the near doubling of oil prices from a low of $37 per barrel late last year to $68 recently.

Better gas mileage = less tax revenue

As average gas-mileage increases to meet higher mileage requirements, less gas used means lower tax revenues (18.4 cents to the Feds on each gallon) to replenish federal and state highway funds unless total miles traveled soars. Worse, upcoming electric cars don't use any gasoline at all, so they contribute nothing to maintain the roads they use.

While President Obama has nixed a higher gas tax for the moment, infrastructure analysts are increasingly calling for a tax not on gasoline consumed but on miles driven--tracked by GPS and other means, which of course has presents many other issues.

We've covered the idea of gas taxes several times before, noting the surprising roster of supporters, including Ford chairman Bill Ford and CEO Alan Mullaly, CEO of mega-dealer AutoNation Mike Jackson, and even the odd Detroit newspaper columnist.

And as we said, whether gasoline gets more expensive is one of three points to watch in Obama's new mileage and emissions regulations.

How would you solve the problem?

Posts on all these topics usually get a healthy dose of user comments. So here's our question: What policies would YOU put in place to reduce petroleum usage and simultaneously keep road-repair funds replenished?

We're eager to hear your thoughts. No ranting, please, but proposals.

[The Hill, The New York Times, Calculated Risk,]

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Comments (25)
  1. If it puts wheels on the road then usage should result in taxes being paid for upkeep (pay as you drive so to speak). I think that there should be consideration for high mileage cars that could result in a tax credit for gas taxes paid for usage under 12,000 miles per year – beyond that the normal gas tax rate is paid.

  2. With the way the government redirects tax revenue around without regard to what the original purpose for the tax was in the first place, one has to wonder how much of our existing gasoline tax is actually being used for road maintenance and improvements.
    I wouldn't be at all surprised to find out that the government already takes in more than enough money from gas taxes, but simply doesn't use the income for the originally intended purpose.

  3. The current gas tax only pays for a fraction of building and maintaing roads. It should be raised to cover the full cost either by raising the gas tax or other means such as tolls or tracking usage. Since heavier vehicles such as trucks cause more damage to the roads than light cars their usage charges should be increased even more than lighter cars.

  4. I know how about we pay for the highways with the money raised from the gas taxes.
    They are going dream up various ways to tax us.
    Mileage tax so those green drivers pay their fair share.
    Or a tonnage tax, lager vehicles pay more.
    Until the smart car can carry two car seats and a stroller, or everyone lives within walking distance to work the Gov needs to spend our money smartly.

  5. Couldn't this be solved with more toll roads?

  6. If we are charging by miles driven, we should also be charging by weight. A heavier car will produce more wear and tear on the road than a lighter car for the same number of miles driven. Given that weight tends to be closely related to gas mileage, charging more taxes on gas is a much simpler solution then trying GPS tracking. If an electricity tax is added based on the pollution that electricity causes, this could level the playing field for EVs and gas vehicles

  7. I have no problem with raising gas taxes on a year by year basis as needed to keep overall tax revenue the same. That means that, overall, people will be paying the same in gas *taxes* (not overall gas costs) as their cars get more fuel efficient. It does penalize those stuck with older, less fuel efficient costs; this could be offset with low-income tax credits towards the gas tax.
    What it doesn't deal with is electric cars. Perhaps a sane electricity tax would deal with this adequately?

  8. If we are to add a tax on gasoline, why not add a tax on displacement of engines as well. It would help to cut down on the size and weight of current vehicles on the road, and thus wear and tear on said roads.

  9. They already have a displacment tax, the gas guzzler tax on cars that don't meet the federal standards.

  10. Higher gas mileage also means lighter vehicles, which means less wear and tear on the roads, so less need for funds. In other words, we use the proportionate amount that we contribute via the gas taxes, so it's a wash.
    On the electric cars, we pay tax on the electricity, plus the oodles of other taxes we pay like registration, sales tax on the car, the tires, etc.
    The answer is to control costs of local and state governments, not to figure out new schemes to take more money from us!

  11. if these weight and gas mileage taxes go into effect, what happens to construction workers and other similar jobs that require a truck? The government will have to pay them more to cover their fees to fix the roads which will result into wasted time and waste of money for everyone.

  12. Have an odometer check as part of the smog/emissions check protocol and have a fee for 15k miles/year with additional fees or refunds for substantially different total miles driven/year. In california you get a smog check every two years. ( but we should also have a safety and cosmetic check like the Germans, this would solve the discrepancy with electric cars)

  13. This proposition defeats the purpose of the lower mileage standards. Lower mileage is being employed because of gas prices, environment, and more importantly it's something that the American people want. Taxing gasoline would just make it harder on the consumers and how long can these oil companies continue to rip off Americans? I say the government regulate the oil companies and put us on the path to becoming oil free.

  14. Legislators are well aware that those with higher mileage cars pay less tax per mile. However, they don't wish to discourage consumers from buying these higher mileage vehicles, or electric vehicles, as they see these as a way of reducing dependence on foreign oil, and a move away from oil all together.

  15. There would be many fair ways to allocate the road debt. Most road damage is caused by heavy trucks - increase their registration fees and increase the tax on diesel. Another way to raise revenue is to require you renew your drivers license every year for $50. Toll roads are another possibility (but would require incentives like much better surfaces or higher speed limits). Maybe states should have different registration fees for electric cars or hybrids or diesels.

  16. almost all of the road wear and tear is from large trucks. Even large cars, just don't weigh that much. That is where the taxes should come from.

  17. What if the tax was changed to being a percentage of price per gallon? That would make up some of the difference. Another method would be to have a tiered tax on volume. x% on the first 10 or 15 gallons of gas, then y% for over that amount. Sure people could just put less gas in their vehicles. A weight tax is also a good idea.
    Pennsylvania also has a cosmetic and safety inspection required every year on top of emissions.

  18. Use the highway trust fund! Oh wait, they already robbed that. Why would more taxes be any different? Road damage is caused by #1 by weight, and #2 by water freezing and thawing. We can't stop the water from freezing but we can get the weight off the roads. 6000, remember that number 6000. That is the amount of damage 1 (ONE!) truck does compared to a car. 1 truck = 6000 cars, burn that into your head. get the freight off the roads and back on the rails where it always belonged.

  19. Raising the gas tax to compensate for less consumption of gasoline is a much more practical solution to transportation revenue shortfalls than implimenting an expensive and unkown GPS system that would be vulnerable to fraud, theft, and require enforcement.

  20. Instead of increasing the present gasoline tax, substitute a new road use tax by implementing a method that uses a bar code on the vehicle that reflects the EPA miles per gallon rating for that vehicle.

  21. road use tax collected by each st reg by curb weight
    0-2000 @.02=$40 2001-3000 @.05=$50 3000 @.10
    Expedition 5578= $368
    Focus 2588= $69.40
    Fusion 3175= $107.5

  22. I think we should increase tax on oil to a considerable amount. I have observed that the fuel prices always depends on supply-demand, In anticipation of improving economy, the wallstreet traders have speculated in Oil and the prices have moved from 37$ to 80$, however if there would have been harsh tax on gas, they could have only raised it to say 50. The resultant pump gas prices would have been almost same, but the money would go to Government instead of few rich companies and oil producing countries.
    An example, last year india increased the fuel prices by 10%, overnight the oil futures dropped to almost 5%, Similar things happened when china hiked the fuel prices.

  23. As nearly half our domestic and imported oil is consumed primarily in the form
    of gasoline to fuel personal vehicles, this is where we need to focus a great deal
    of our attention and investment dollars.

  24. Higher gas taxes at least gives people options. You don't have to pay the tax if you don't want to. Just reduce your drive time and increase public transportation usage. This would reduce gas usage to some degree, but most people would do without other things and continue driving.

  25. I would like to see an energy tax set at a linear percentage of energy’s market price; that way, revenues would vary with that market price.

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