Last year at this time, I wrote a blog regarding fuel taxes and their effect on the funding of our highway system. In February 2014, this issue is making transportation news headlines and is still an unresolved issue today.
From what I’ve studied lately, all the major stakeholders and associations in the Transportation Industry are in favor of an increased national fuel tax to sustain our Nations Highway System.
My plans are to contact my congressman this week to show my support for an increased fuel tax. I prefer an increase in the fuel tax over a cumbersome and inefficient vehicle miles traveled (VMT) tax. Some are in favor of the VMT and if we don’t support the fuel tax increase, we are going to end up with a VMT which is nothing more than tolling our Nation’s Highways. Below, you will find my blog post from last year which still remains and important, yet unresolved issue.
DO WE WANT OUR FUEL TAX AT 1932 LEVELS?
We always hear our politicians talking about tax issues and the fact that they themselves aren't going to raise them. Taxes always seem to provide a lot of debate in the political arena.
In the transportation industry, there's been little dissent in relation to increasing fuel taxes to fund our highways. It's not often that our politicians have the support of an industry to raise a tax on a product that said industry depends upon. The only area of contention seems to be that if you're going to tax us and take the money, then use it for the highways and make our roads and bridges safe, efficient and more productive.
The need to fund our highways had me inspired to do some research on the subject. I found that fuel taxes weren't keeping up with inflation. In fact, as a percentage of the price of fuel, I found that fuel taxes are actually close to a historic low. Don't get me wrong, I don’t want to pay more taxes, however I need these highways of ours to be in good working condition in order to conduct my transportation business.
Let's analyze this deeper...When fuel prices go up, the cost of maintaining a highway goes up due to increased material costs. As vehicles become more efficient, it reduces the amount of revenue collected per mile in fuel taxes. These factors combined with wasteful spending are what has caused our highway funding budget shortfalls.
The fuel tax as a collection mechanism has proven to be one of the most efficient manners of collecting funding for our highway system. Another positive feature of fuel taxes is the fact that it provides an incentive for increased fuel efficiency. It would seem as though fuel taxes would have a bright and sunny future of sustainability, however too much political will seems to be moving in the direction of vehicle mileage taxes (VMT). From all accounts, VMT's are not an efficient mechanism of collecting revenue due to their high administration cost.
Our highways and bridges need improvement and we require a solution to the problem sooner than later. Upon my research, I came across these figures which I thought were interesting...
The Federal Excise Tax on gasoline is 18.4 cents per gallon. Diesel is 24.4 cents per gallon. In 1932, which was the first year of a Federal Excise Tax on fuel, the cost was 1 cent per gallon and the average fuel price was 10 cents a gallon. For the fuel tax to be the same percentage of the price per gallon today, with fuel hovering at $4.00 per gallon, this same Federal Tax would be 40 cents per gallon.
That should be enough to provide proper maintenance/repair of our highways. Just a thought...