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Fuel Efficiency Hurts: Gas Tax Revenue Plummets, Roads Crumble

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Cars with higher gas mileage pay less per mile in gasoline tax. And plug-in cars pay no gas tax at all.

With far tougher fuel economy standards looming--34.1 mpg by 2016 and no less than 54.5 mpg by 2025, assuming final rules are issued by the NHTSA and EPA--the problem is only getting worse.

$400 billion shortfall

Yet the Federal gasoline tax remains the largest funding source for U.S. road and highway repair. The gap between the revenue raised by the tax and the amount needed to keep our nation's roads, bridges, and highways in good repair has never been larger.

The National Surface Transportation Infrastructure Financing Commission, a bipartisan panel, called two years ago 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 to 2015.

Just 40 percent of what's needed

Almost two years ago, Jack Basso of the American Association of State Highway and Transportation Officials said the U.S. is now spending just 40 percent of the amount necessary to keep both roads and mass-transit systems in good repair.

One obvious solution would be simply to raise the Federal gasoline tax along with mileage standards. Any number of economists, auto-industry analysts, and corporate executives--most recently, GM CEO Dan Akerson--have urged that the gas tax be raised.

No change since 1993

But despite the fact that it hasn't gone up from its level of less than 20 cents a gallon since 1993, in today's political climate, proposing a tax raise seems roughly akin to suggesting mass matricide.

I-405 Mulholland Bridge

I-405 Mulholland Bridge

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Congress is now in the middle of working on another six-year transportation authorization bill. And a recent article from Pike Research highlights the huge funding challenge it faces.

All states get more than they give

The article describes a report from the U.S. General Accounting Office highlighting a frightening fact: From 2005 to 2009, every single state got more in highway funding from the Feds than it sent to the Highway Trust Fund in gasoline taxes.

As the writer notes, "The federal government chipped in additional money from general tax revenues to support states’ highway and mass transit investments."

Gas tax no longer viable?

In other words, rather than drivers paying some roughly proportionate share of usage costs based on their gasoline usage, now everyone pays for roads. Including those citizens who never once get behind the wheel.

Feeling Taxed at the Pump?

Feeling Taxed at the Pump?

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The GAO report concludes that the Federal gasoline tax may no longer be a viable way to support the Highway Trust Fund.

Vehicle miles traveled

One alternative is to tie fees directly to vehicle miles traveled, via transponders or annual vehicle inspections that calculate miles driven from the odometer.

Vehicle location data is increasingly available--from smartphones, built-in navigation systems, and other sources--but significant privacy concerns remain, let alone the challenges of rolling out such a system to the 250 million vehicles on U.S. roads.

How would YOU fund it?

So we throw it over to you, our readers: How should the U.S. make up the hundreds of billions of dollars it needs now simply to put our highways back into a state of good repair?

Leave us your thoughts in the Comments below.

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Comments (2)
  1. Raise the gasoline tax and change it to be a percentage rather than cents per gallon so that it can keep up with inflation. Seems like that fact alone has created this problem.

    At the same time, remove all tolls at interstates. This is the worst possible way to collect revenue.

    When EVs reach 1% of the road cars, figure out how to tax them. Don't tax EVs at this time.
     
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  2. It makes sense to me that some of the costs of our road system are paid by all taxpayers, not simply drivers. Heavy vehicles such as trucks and busses are responsible for nearly all of the wear & tear on roads, not passenger cars, because their greater weight massages the surface as they pass over it. A quick search tells me a 2 ton vehicle causes 16 times as much wear as a 1 ton vehicle. We all share the benefits of goods brought to our stores by trucks, so in some ways it would be more fair for all of the cost to be paid by taxes from the general fund.

    As far as amending the current system, it seems more fair to charge per miles on our odometers each year, but that raises the issue of adding a new bureaucratic system to oversee it.
     
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