One Drawback of Fuel-Efficient Cars? Higher Gas Taxes


tax-pumpThe Federal Highway Fund has had a budget shortfall for decades, owing mostly to the fact that the Federal gas tax hasn’t budged since 1993. That alone was bad enough to cause our infrastructure to fall trillions of dollars behind, and new more fuel-efficient cars are only compounding the problem. This has Transportation Secretary Ray LaHood looking at options that include higher taxes and tracking miles driven.

Between 2012 and 2013, the Congressional Budget Office estimates that the highway fund is about $110 billion short, and that doesn’t even account for the trillions in neglected infrastructure improvements across the country. LaHood has floated the idea of taxing vehicles based on miles traveled before, but the idea is gaining new traction among politicians looking to bolster Federal coffers. Some states have even floated this idea on their own, though implementing such a system would be quite expensive and difficult.

To make up the budget shortfall, politicians would either have to raise the gas tax by between 30 and 46 cents per gallon, or establish a method for tracking and taxing annual miles driven. This “miles driven” tax would cost between 0.9 cents and 2.2 cents per mile. This would cost the average driver between $100 and $260 per year, and would require GPS tracking devices in every vehicle.

That makes taxing vehicle miles traveled essentially a non-starter, which really leaves only raising the gas tax as an option, though lower tech methods of tracking mileage (like an annual mileage “check up”) could be employed. Higher gas taxes are an inevitability though, and even Bob Lutz thinks gas prices should be higher. But with the nigh-unworkable political climate in Washington D.C., it may take a few more bridge collapses to convince politicians and the public that a higher gas tax is an absolute necessity.

Source: The Truth About Cars | The Detroit News | Image: Michael Kappel

About the Author

A writer and gearhead who loves all things automotive, from hybrids to HEMIs, can be found wrenching or writing- or else, he's running, because he's one of those crazy people who gets enjoyment from running insane distances.
  • KM

    I think the math is off in paragraph #3, unless the average miles driven per year is 100,000.

    • Christopher DeMorro

      @ KM

      Yup. This is why I am a writer, not a mathematician. I swear, every time I try to do math on this blog, I screw it up.

    • jeloij

      Nope, math looks right to me.

      • KM

        Yes, now it is correct. It originally read $1000 to $2600. The correction was not acknowledged.

  • T Adkins

    They could stretch out the increase over 6 years, make it a nice $0.82 per gallon increase, start it a 7 cents the 1st year and then by 15 cents each year for the following 5 years. With the federal tax being 18 cents now the 7 will get it to 25 cents and the 15s will push it up to a full $1 in the 6 years considering the push for better MPGs the tax to maintain our roads will need to go up.

    • curly4

      How much will the EV owners have to pay and how will it be assessed so they are paying an equivalent tax?

  • UncleB

    Back to the curves again! When world prices for gasoline exceed domestic electric vehicle costs, America will receive a bonus in transportation, all other things(taxes) being equal? An America that takes huge foreign loans to pay for foreign gasoline and oil and has domestic electricity that would, could and should do the job needs a good kick in the ass for running up debts, national debts for personal preferences?
    Solar, wind, wave, Hydro, Tidal, Geothermal, Biological, and Thorium domestic electric sources – even lowly, old fashioned uranium enrichment from the 1940’s a domestic electric source, yet, America fracks artisian water formations, and imports huge amounts of oil, raising national debt. Conversion to electric by the curves is still more rewarding in the long run. We have yet to truly address the Chinese long distance electric bullet train phenomenon, proven reliable this past decade in China at 320km per hour speeds and we have not equalled it. It runs on domestic nuclear electricity not oil at all.

  • ASG

    The feds should move to a registration fee across all vehicles based on vehicle value (similar to some states) rather than a gas tax (although a higher gas tax provides incentives to switch to EVs, but can be regressive in nature until competitive, low-cost EVs are avabilable). Or tax heavy trucking. They do 99% of the damage to roads and the increased cost of shipped goods would be shared equally across all consumers (and potentially drive improvement in local consumption options).

  • Anthony J. Alfidi

    Transportation finance is going to get exciting. Plenty of California projects need a consensus on sustained funding. More fees are coming.

  • curly4

    What I would like to know is how the Feds and states are going collect the road tax on EVs? At this time the EVs have a free pass.