Filed under: Legislation and Policy
Gas tax holiday killed by road crews, not common sense, tax increase soon
As you may have noticed when filling your tank, the plan for a gas tax holiday put forward by presidential candidates from both party brands, never came to fruition. The idea had been suspend an 18¢ per gallon federal tax on fuel from Memorial Day to Labor Day. Of course the fact that this would have saved average drivers a whopping $28 had little if anything to do with the lack of movement on bills from both Democratic Sen. Hillary Clinton and Republican Sen. John McCain. It turns out the real coup de grâce may have come from the road construction industry. The excise tax money which would have meant little to individual drivers, comes out to an aggregate $9 billion. That's money that is supposed to go toward building and maintaining roads around the country. Without that money, road construction projects would have to be put off. Canceled or delay construction projects would mean laid off construction workers, a prospect that no politician hoping to get re-elected relishes in an election year. Rather than a tax holiday, drivers are in fact likely to see an increase soon. While high fuel prices have the benefit of pushing people to drive less, and consume less fuel, that starves the highway trust fund as well. As a result the fund is likely to be in deficit this year to the tune of $3 billion. As a result a fuel tax increase may be needed.
Looking ahead, we may need to start taxing electric bills to get funds to build roads. Even though electric cars use no petroleum, they still put wear and tear on the roads and it's only far that the drivers who use those roads should pick up the tab. Alternatively increased use of toll roads may be necessary, something proposed by Transportation Secretary Mary Peters.
[Source: Detroit News]
Reader Comments (Page 1 of 1)
Phil L. 8:45AM (7/21/2008)
Speaking of EVs and road tax: The biodiesel and greaser folks should keep an eye on this topic. If road dollars continue to be in short supply, they can expect the tax man to take a closer look at home-brew fuels.
Reply
Sean 8:52AM (7/21/2008)
I'd been wondering about how they would handle road-taxing EVs once enough of them to matter were sold. While taxing electric bills would be easiest & cost the gov't less, toll roads would be the fairest for obvious reasons. (Besides, those with solar should still pay a road tax if they use the roads.)
Reply
GoodCheer 9:49AM (7/21/2008)
About road tax:
I've mentioned before, the damage caused by a vehicle to a roadway increases as the cube of the axle weight. So if my 1000kg Civic on two axles causes 1 unit of damage (and should thus pay 1 unit into the repair funds), a 3000kg Hummer on 2 axles causes 27 units of damage so should pay 27 times as much road tax, while a 25,000kg semi truck on 5 axles causes 1000 units of damage and so should pay 1000 times as much.
At that point even the damage caused by the Hummer is just a rounding error. Trains, I will hasten to point out, are entirely responsible for ALL the damage they cause to their roadway, while trucks are massively subsidized by everyone who buys gas.
If I could get a 1000 kg EV, I would be more than happy to pay an electricity tax that amounted to 1/10th of 1% of what truckers pay in fuel tax per mile. I wouldn't even notice it.
Reply
UH2L 10:38AM (7/21/2008)
Yes, but if your gas tax went down and taxes for trucks went up, we would all pay more for everyday things we buy at the store because trucks deliver it from ports and railway stations closer to the point of sale. Those charges just get passed through to us in the end.
GoodCheer 12:43PM (7/21/2008)
"Those charges just get passed through to us in the end."
They absolutely would, that is exactly correct. The total amount we pay would remain about the same (on average). However, those charges would to two other things; they would make trains more competitive (by leveling the playing field), and they would make locally grown/manufactured products more attractive.
Both of those consequences are things I consider to be 'green', sustainable, and good for American farming and business, and probably also good for the American consumer in the long run.
goehring 1:04PM (7/21/2008)
Also, it is commonly believed that fuel taxes pay for all road construction and maintenance.
This isn't always true at the state and local level.
meme 1:58PM (7/21/2008)
Excellent point, Good Cheer.
What's your proposed means of implementation? Scales at the entrance to toll roads? Or perhaps every vehicle gets some sort of EZ-Pass that encodes the model type (and stock weight) into it?
Serge 9:57AM (7/21/2008)
I wonder how much "wear-and-tear" is actually put on by passenger vehicles on the light-weight side? W&T caused by a 50,000 lbs truck must be much higher than a 5,000 lbs car.
Reply
Bryan 10:09AM (7/21/2008)
One proposition is to eliminate the tax on gas and transition to a mileage based tax. The tax would be based on the annual number of miles driven and would be paid when you renew your vehicle license tags. The necessary tax infrastructure to accomplish this transition currently exists and would cost very little to implement.
It is very simple to verify the mileage and any state employee could easily do it. Many states could have the information recorded during the mandatory inspection. New vehicle registrations could either be exempted or pay an estimated tax and receive a credit or pay the difference at the next renewal.
As for commercial vehicle operations (CVO), yes, the trucking industry does far more damage to the roadway than passenger vehicles, and that industry has been subsidized heavily by the existing gas tax. Transitioning to a mileage based tax may help this situation somewhat. CVO currently has a different mechanism to pay taxes and a mileage based tax could even take into consideration the loaded weight of the vehicle thus reducing dead head taxes where a truck hauls freight one way but does not have a pickup at the destination.
Reply
Throwback 12:22PM (7/21/2008)
Most states do not require a yearly inspection. In NJ for example a new car is not inspected until it is four years old. Then it is every 2 years. States did this to save money, switching to a yearly inspection not only would cost money, but imagine the back-up at DMV the last week of every month.
Reply
Joey 12:32PM (7/21/2008)
The DMV has nothing to do with car inspections. There are designated gas stations that do that.
Mike 12:32PM (7/21/2008)
1st) The cost of the toll should have nothing to do with EV or gas powered vechicles. A Honda civic gas or hybrid should be considered to cause the same road damage. Prove one does more damage than the other.
2nd) The taxes should be based on the type of car and the mileage driven. My insurance company asks the yearly mileage on my car. I'm sure that info is stored in the computer of most cars that could be check upon the vechicles inspection. I believe there is a sliding scale when you register a car. A bigger heavier car or truck cost more to register than a Smart car.
Reply
Whopper 2:20PM (7/21/2008)
@10 Joey, you must live in NY or TX or ?? NJ has had state operated inspection stations for 60 years or more.
The whole vehicle inspection deal is bogus and designated gas station inspections were a scam in NY. I pulled in and asked to have an inspection and the guy began adjusting my headlights without even checking them. Obviously the "inspection fee" was not adequate in his view. Someone who was a regular customer, however, got an inspection sticker by handing over the cash - the car never even got into a bay.
Reply
Joey 2:27PM (7/21/2008)
State operated. Does that mean DMV?
Seth 2:50PM (7/21/2008)
Well,
The solution is simple, eliminate the tolls altogether and just charge for the registration. So instead of it being like $30 to get a license plate, make it $2000 for an gas guzzler (porsche/SUV same thing) and $150 for a Fit. It can be based on vehicle weight instead of mileage because there is already a gas tax. Scooters can still be $30 though.
Reply
DJL 3:48PM (7/21/2008)
The idiot politicians in RI have been debating new toll roads lately.
Problems with toll roads-
1. Accidents at toll plazas.
2. Waste of fuel as cars stop/wait/start.
3. More bureaucracy and gov't waste
Forget the gas tax holiday. Fix the roads.
Reply
Wally 8:11AM (7/22/2008)
If the gas tax is increased you can bet that McCain will blame Obama for it...just like he is being blamed for the current high gas prices. WTF?
Reply
Whopper 10:47AM (7/22/2008)
New Jersey Department of Motor Vehicles (DMV)
Reply