Higher Fuel Efficiency = Higher Taxes
All the talk of creating more fuel efficient vehicles and more alternative fuels being used could have a negative impact on the government’s fuel tax which could mean taxpayers would have to make up the difference.A recent report from the Congressional Budget Office has found that there will be a $57 billion shortfall through 2025. This shortfall is directly related to rising fuel efficiency standards since the cars buying less gas means less gas taxes collected.
The taxes collected from gasoline go toward new road construction and road repairs. Considering the state of the roads in the U.S. and bridges for that matter too, it is not a great idea to spend less money on fixing them.
The current gas tax rate is 18.4 cents which has been in place since 1993. The choices are to increase this number or cut spending on road repairs.
According to a story in the Detroit News, “The report says that the higher efficiency standards — including the 2012-2016 rules — will cut the Highway Trust Fund by 13 percent over 11 years through 2025. By 2040, the new rules will reduce the nation’s gas tax revenue by 21 percent annually. The reason the full impact isn’t felt immediately is because the entire 2025 fleet won’t turn over until 2040, the report said.”
Also compounding the issue is new alternative fuels and engines like electric. As we have previously reported, lawmakers are looking at adding a new tax to new electric vehicles to make up for a shortfall in gasoline taxes.
The question then is with already high gas prices what will politicians do. Seems like any attempt to increase taxes on anything especially fuel, is a toxic issue. What do you think? Should we raise fuel prices or maybe build more toll roads? In the end, something has to budge.
Filed Under: Auto News