Why Gasoline Taxes Are a Problem

France has a new “fat tax.”

Targeting SUVs that weigh more than 1,800 kg (almost 4,000 lbs.), the tax pays for the extra damage done by heavy vehicles. Supporters of the levy say that SUVs emit more CO2 and their bulk tears up our roads. Also (confirmed by a Minnesota study), because they are big, and leave less room for other cars, they cause congestion.

The SUV tax is one way we could pay for our roads.

Road Funding

Every time we buy a tank of gas, 18.4 cents goes to the federal government for our highways and mass transit. Now though, cars are more fuel efficient, and we are buying EVs.

State Revenue

But states depend on gas tax revenue:

Consumption

And, their real revenue is sinking:

Federal Revenue

We also need our Highway Trust Fund. As the recipient of federal gas tax dollars, the Highway Trust Fund is responsible for building and maintaining our interstate highways and bridges. In addition, its Mass Transit Account is supposed to allocate funds to buses, railways, and other public mass transit.

You can see below that the Highway Trust Fund will soon run out of money:

Our Bottom Line: the VMT

Summed up perfectly by Pew, our road funding is inadequate. Currently not enough in Oregon, Maryland, and Washington, it will soon be insufficient elsewhere. Even with state vehicle fees up, soon we won’t have enough because of fuel efficiency and the EVs that need no gas.

Predictably, New Jersey tried to solve the problem by raising its gasoline tax but then they surprised me, as an EV owner, with a $250 annual road use tax.

VMT

I suspect, though, that the real solution is a VMT (Vehicle Miles Traveled) fee. Through a U.S. House of Representatives pilot program that was mandated by the 2021 Infrastructure Act, we could be paying nine tenths of a cent for each mile we drive…

…with the Southern US states paying the most:

VMT issues include selecting a tracking method, a tax rate, and deciding if privacy is a big problem:

So, while there is lots to think about, still, we appear to be heading in the VMT direction:

My sources and more: For the most up-to-date gas tax facts, do take a look at the Tax Foundation. Then, for the Highway Trust Fund financials, Peter Peterson came in handy. In addition, Advisor Perspectives told about regional driving totals, Car Throttle had the French heavy SUV tax, and as always, Pew focused us on the key issues.