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The Decline of Fuel Taxes and New Transportation Funding Options
Manning, Kevin M.
Manning, Kevin M.
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Abstract
Fuel taxes originated in the early 1900s to address the problem of a growing roadway
system without an adequate means to fund this system. These taxes created the concept of the
“user-fee,” meaning that those who use roadways should pay for them. In addition, the
predictability of the tax helped plan for and grow the roadways system. However, a variety of
forces now place this system in peril.
Raising fuel taxes has become toxic politically, causing inflation to eat away at the
purchasing power of the tax. With no increase since 1993, the tax has lost over a third of its
purchasing power over that time. Additionally, Corporate Average Fuel Economy (CAFE)
standards are rising, meaning vehicles are more fuel efficient, which is positive in one regard, but
ultimately results in less revenue per mile driven. Finally, the uncertainty of petroleum imports
and the growth of alternative fuel vehicles indicate a new funding structure is needed.
The literature covers several options to supplant the existing system: income taxes, sales
taxes, public-private partnerships, vehicle miles traveled (VMT) taxes, and high occupancy tolls
(HOT). Of the options, the most preferred was VMT in conjunction with HOT. Sales taxes were
also considered a viable option.
To address the preferences of transportation professionals and their constituents, a survey
covering these options was created. From the responses, it was clear that the status quo of fuel
taxes will be difficult to overcome. Both groups preferred fuel taxes as the first option to fund
transportation over the next 30 years. VMT was the second option preferred by professionals,
but was only the fourth option chosen by the general public. Additionally, the survey
highlighted that technology and implementation issues are a hurdle that must be overcome for
VMT and HOT to be successful.
Description
Date
2012-12-14