Highways are wonderful things, but people rarely stop to think about how they’re financed. Sure, as public projects, they come out of your taxes, but do you know which taxes? You may be surprised to learn the answer.
It turns out that our interstate highways are funded largely with fuel taxes: about eighteen cents per gallon for gasoline and 24 cents per gallon for diesel, as trucking and shipping puts more wear-and-tear on the roads. And that’s before any state or local taxes that might be implemented.
Needless to say, the guy tooling around in a hybrid, or even dropping the $32,000 necessary for a Nissan Leaf, is not exactly paying his fair share. But if it’s any consolation, your share has been dropping over time as federal emissions standards have raised the number of miles cars need to squeeze out of a gallon with each passing year. Combine that with the ongoing pain at the pump, and everybody is paying at least a little bit less for gasoline…and as a result, paying a little bit less to keep the roads smooth.
So the day isn’t so far away — with dozens of hybrids on the market and electric vehicles (EVs) becoming more and more commonplace — that taxing fuel just won’t cover the bills. In fact, that day is about a month from now: the Congressional Budget Office, which is nonpartisan, has raised serious concerns that the highway fund won’t be able to pay for roads starting next year. So what’s the government to do? Charge you by how much mileage you use, of course! But can it actually do that? The jury is still out.
First, it’s worth looking at how much you pay in the first place: your average American driver pays $250 per year in fuel taxes to the federal government, or approximately 1.6 cents a mile. So the idea is that the government would require a mileage tracking device installed in all cars that tracks your mileage and charges you two cents per mile.
That may sound a little outrageous, cost-wise, but stop and consider this for a minute: Americans spend, on average, $386 a month on gasoline (that’s more than auto insurance). So even if the government just took away all taxes on gas, you’d still actually be coming out ahead financially. That’s not really the problem.
The issue is…does the government have the right to install a monitoring device, however simple, in your car? In fact, the Supreme Court is currently examining that issue right now. Needless to say, there are two schools of thought on the issue, one being that the government has a right to collect that information, and the other that the government doesn’t, especially if the information is collected via methods such as GPS, which would give “the man” your exact location at any given time. True, they could just tie a device to your odometer … but then that raises the question of how the information will be collected and reported.
One thing, however, is for certain: there’s no free ride on the highways, and EV and hybrid drivers should enjoy the lower prices they’re paying while they can. It’s only a matter of time before Uncle Sam’s going to show up, hand out, for you to pay your share.