Gas Taxes Don’t Cover US Road Costs — Not Even Close

Originally published on EV Obsession.

While it’s assumed by many drivers that gasoline taxes completely cover the cost of road maintenance, and are perhaps even too high, that appears to not even be close to the truth of the matter — going by a newly released report from the Frontier Group, in cooperation with the US PIRG Education Fund.

The findings of the report are blunt: the price paid by US drivers for gas doesn’t even come close to covering the direct (much less indirect) costs of road use and maintenance. In other words, without even factoring in the effects of air pollution, auto accidents, associated healthcare costs, urban sprawl, etc, gas taxes in the US still don’t cover the costs of driving on US roads.

What this means, when it really comes down to it, is that fuel costs should be higher in the US than they currently are. Or, to put it another way: Driving is, in the US, subsidized to a substantial degree.

When it comes to electric vehicles, it also shows that paying for road costs will get more complicated as the market grows. Should we switch to some straight vehicle road tax fees? Should the gas tax simply be raised (good luck with that) and electric vehicles be subsidized? Should a tax based on vehicle miles traveled (and weight) be implemented? Should we switch over to a massive system of toll roads?

Planetizen provides more on the topic:

Federal subsidies to the highway administration system are enormous. “Since 1947, the amount of money spent on highways, roads and streets has exceeded the amount raised through gasoline taxes and other so-called ‘user fees’ by $600 billion (2005 dollars), representing a massive transfer of general government funds to highways,” according to the report.

The price mechanism for road use is not based on a user fee because gas taxes, which are often referred to as user fees, are not necessarily directed to the actual roads the driver uses. In some cases, states subsidize federal highways, in other cases, the federal government has redirected gas tax revenues to pork-barrel infrastructure projects, and with the exception of tolled roads, drivers pay rates based on mileage, not the actual roads they use. Cortwright argues that if gas prices and other vehicle use fees reflected the true cost of use, single-occupant vehicle use would decrease, as drivers would opt for cheaper forms of travel.

“These facts put the widely agreed proposition that increasing the gas tax is politically impossible in a new light: What it really signals is car users don’t value the road system highly enough to pay for the cost of operating and maintaining it. Road users will make use of roads, especially new ones, but only if their cost of construction is subsidized by others.”

Considering that, amongst the younger generations in particular, car use is already becoming somewhat cost prohibitive at current gas prices, one can’t help but wonder how many fewer people would be driving if gas taxes were increased enough to cover associated costs.