Higher Fuel Tax For US?

Update Required To play the media you will need to either update your browser to a recent version or update your Flash plugin.

By Paul Westpheling
02 July 2009

Increased fuel efficiency in cars and trucks has been a goal of governments, consumers and environmentalists for decades. Now, just as alternatives to petroleum fuels are becoming widely used, governments are having second thoughts about the impact fuel savings will have on their budgets.

Taxes have been levied on transportation fuels for decades. In 2007, the last year for which the U.S. Department of Transportation has published data, the tax on gasoline and diesel fuels contributed nearly $35 billion to the trust fund, but that is $4 billion less than what was spent. Transportation planners are looking at new ways of raising money to pay for repairs and replacement of highways and bridges.

Long exposure to air pollution from cars and trucks can cause a build up of cholesterol in blood vessels <br />

Proposal would tax drivers on each mile driven.

"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.

With the help of a $16 million dollar federal grant, the University of Iowa began testing a system that would tax drivers on the miles driven instead of on each gallon of fuel purchased.

So far, 1200 vehicles have been using global positioning system monitors to track miles driven and another 1500 vehicles will be added to the project in the next few months.

"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, will pay no taxes. Hybrid vehicles will generate even less taxes.

But don't look for the new tax structure to be adopted soon. After the University of Iowa finishes its project next year, a report will be submitted to Congress and by 2015 a change could be made.

Privacy Issues

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.

go top