How Much Will You Have To Pay For Higher MPG?

By Antony Ingram

Antony Ingram

Contributing Writer BIO

Antony is an automotive obsessive: Whether it drives, sits there looking pretty or intrigues from afar, he'll talk and write about it. Automotive... More

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The improving fuel efficiency of modern cars is set to be a double-edged sword for car buyers, at least as far as reducing gas bills is concerned.

With gas mileage rising all the time, we're using less fuel--undoubtedly a good thing. That also means less gas tax revenue for the government however, which has an impact on spending for new roads, road repairs and more.

That, reports Detroit News, is why the government has been told by the Congressional Budget Office (CBO), to consider raising the 18.4 cent per gallon federal gas tax.

Unchanged since 1993, an increase in tax would make up for the expected 13 percent reduction in the Highway Trust Fund by 2025.

The 54.5 mpg fuel standards due between 2017 and 2025 are expected to impact dramatically on gas tax revenue, amounting to a $57 billion reduction. According to the CBO report, that's $48 billion less to fix roads, and $9 billion less for mass transit spending.

The gas tax revenue would then reduce even further by 2040, by which point the majority of cars on the road would meet the 2025 fuel regulations.

So how much would you have to pay to make up this deficit?

The CBO estimates around 5 cents per gallon, meaning 23.4 cents on every gallon would be tax. The increase also accounts for a small reduction in fuel use nationwide, as a result of the higher tax rate.

The tax increase hasn't been officially decided upon just yet, but it's certainly plausible.

Despite these increases, the Obama administration still predicts that thanks to rising fuel efficiency, drivers will still save $1.7 trillion at the pump over the period--though whether this takes into account the rising price of crude oil is unclear.

Drivers aren't out of the trees just yet though--the CBO is also suggesting the government considers a tax on miles traveled. That wouldn't just affect fossil-fueled vehicles, but electric cars too--you have been warned...

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