Higher Fuel Efficiency = Higher Taxes

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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.

Higher Fuel Efficiency = Higher Taxes

More fuel efficient vehicles will mean people spending less in gas which also means less Government tax revenue. Seems we will always pay for gas in the end.

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.

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  1. Mickey says:

    Boy is this a familiar situation here in Jax, florida. Where JEA who does our water pleaded for people to cut back on there use. The people cut back so much JEA had to (according to them) increase the price because the company wasn’t making enough. Makes no sense but that’s what you get when one comnpany has the monopoly on the water.

  2. Josh says:

    I think there is plenty of trimming in the government that we could do before raising taxes on gas any more. Im looking at you EPA :)

  3. Will says:

    Some people like to fool themselves by thinking that a larger gas tank is the same as higher gas mileage. But if gasoline shortages occur, caused by either a natural or deliberate disaster—or another oil embargo, fuel prices will spike again, everyone will be subjected to gas rationing, and a larger fuel tank will not help.

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