April 19 2013
This commentary appeared on Wall Street Journal Online on April 18, 2013.
Are current gasoline taxes—both state and federal—the best way to pay for needed transportation expansion and improvements? If not, what should replace them?
The nation has long relied on federal and state fuel taxes on gasoline and diesel to fund highways. Because the more you travel, the more fuel you consume, and hence the more tax you pay, fuel taxes have traditionally been viewed as a fair way to allocate the costs of building and maintaining roads. High fuel taxes, as in Europe, also create an incentive for adopting more fuel-efficient vehicles. Yet fuel taxes—typically levied on a cents-per-gallon basis—have lost ground to inflation and improved fuel economy in recent decades, and legislators find it difficult to raise fuel-tax rates to offset these factors. This has led to increasing transportation funding shortfalls. More stringent federal fuel economy standards along with a possible shift to alternative fuels in the coming years are likely to further undercut fuel-tax revenue.