Sustainably Funding Transportation Infrastructure: Tax Fuel or Miles?
31 Australian Tax Forum 609 (2016)
39 Pages Posted: 15 Feb 2017
Date Written: December 31, 2016
The United States faces an infrastructure crisis. The United States has funded its transportation system with a dedicated tax on gasoline, which has not been increased for over two decades. The funding structure for highways and transit is not working for today’s transportation needs. As motor vehicles have become more efficient, they use less fuel, which means less revenue for the transportation system. This revenue shortfall leads to consideration of a tax shift from fuel taxes to vehicle miles travelled taxes. A shift from taxing fuel to taxing miles travelled creates many policy implications, including whether replacing fuel taxes with vehicle miles travelled taxes would encourage the use of less fuel efficient vehicles, with a resulting negative impact on the environment. This article considers the benefits and detriments of the different funding approaches for transportation needs.
Keywords: Tax, Transportation, Motor Fuels
JEL Classification: K34
Suggested Citation: Suggested Citation