Fuel Efficient Cars Create Problems for Transportation Budgets

As cars and light trucks become more fuel efficient, transportation planners are looking at new ways of raising money to pay for repairs and replacement of highways and bridges.

One proposal is to scrap the current system, which levies a tax on each gallon of fuel purchased, and replace it with a tax motorists would pay for each mile driven.Current System Losing MoneyThe U.S. government began collecting a tax on fuel in the 1930s. From the original one cent, the tax is now 18.5 cents per gallon.As cars become more fuel efficient owners buy less gas and pay less tax."The current system is no longer a reliable way of raising sufficient resources," says John Kuhl at the University of Iowa where a test of a new system of collecting taxes is being conducted.

In 2007, the last year for which the U.S. Department of Tranportation has published data, the tax on gasoline and diesel fuels contributed nearly $35 billion to the transportation trust fund used to fund road and bridge repair.  

However, the U.S. transportation infrastructure is rapidly aging and more money is needed. In 2007, there was a $4 billion budget shortfall.

"Fuel efficient vehicles are undermining the current system," says Kuhl, "and with vehicles - mainly cars and light trucks - coming to market using alternative fuel sources, the situation is going to get a lot worse."Electric vehicles, for instance, pay no taxes. Hybrid vehicles use less fuel and generate less tax revenue."The fund is, for all intense and purposes, broken," and Kuhl says something has to be done.Testing Alternative SolutionsWith the help of a $16 million U.S. government grant, Kuhl and others at the University of Iowa are testing a system that would tax drivers on miles driven in lieu of a tax levied at the gas pump.The question researchers face is how to devise a system to track vehicles and levy a tax. At the University of Iowa, they are testing a system that uses a global positioning system to monitor and track miles driven. 1200 vehicles are in the study now; another 1500 vehicles will be added in the next few months.There are several questions that have to be answered and maybe the most important is how to safeguard privacy."We have to make sure we don't collect too much information, such as where people drive," says Kuhl.And then there is the question of how people will pay the tax. One proposal is to collect the information and then send drivers a bill in the mail."They could pay it, just like they do their utilities now," says Kuhl.The University of Iowa expects to finish its study next year and submit a report to Congress.

Fuel Efficient Cars Create Problems for Transportation Budgets