Does America's Gasoline Tax Still Make Sense? | Web version

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April 3, 2013

Transportation and Infrastructure

Does America's Gasoline Tax Still Make Sense?

Gas pump

The cost of gasoline experienced an unusually large increase this February, with prices climbing more than 40 cents per gallon. Yet not a single penny of that increase went toward improving America's roads.

The federal government and most states levy fuel taxes, which have been the primary source of highway revenue for close to a century, on a set cents-per-gallon basis. As a result, increases in the per-gallon price of gasoline do nothing to help finance transportation and infrastructure spending. Additionally, as more drivers turn toward high-mileage cars such as hybrids and electric vehicles, taxes collected through the purchase of gasoline dwindle, further limiting the ability of the federal government to pay for needed highway and infrastructure costs.

One way to preserve the user-pays idea is to have a mileage-fee system, in which all drivers pay for the number of miles they drive. There are many ways to implement such a system, but there are also many hurdles. The biggest hurdle is gaining public understanding of how such a system would work and what it would and would not do.

In a recent op-ed, RAND Corporation senior project associate Liisa Ecola describes how a voluntary trial system could be the critical first step in demonstrating the benefits of a user-pays system and alleviating many of the potential concerns. This op-ed, recently published in the Orange County Register, is based on the RAND report Mileage Based User Fees for Transportation Funding, the most recent of several publications completed by RAND on the subject of a mileage based user fee system for road finance.

The op-ed can be viewed at www.rand.org/commentary/2013/03/06/OCR, and the full report is available at www.rand.org/pubs/tools/TL104.

Please let me know if you have any questions, would like to speak to the study's author, or would like a hard copy of the study.

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