The Federal Fuel Tax Isn’t Keeping Up with American Infrastructure

Funds-Starved American Infrastructure

The United States federal tax on fuel, first passed in 1932, is the funding source for new highway and bridge construction projects. This tax is not tied to inflation and has not been increased since 1993. As vehicles have become more fuel efficient, and infrastructure projects have become more expensive, the buying power of the fuel tax has fallen steadily over the past 25 years. It currently isn’t capable of funding the infrastructure that the United States needs.

Updated and Double Indexed

To make the fuel tax into an adequate funding source for infrastructure projects, it should be increased by at least 10 cents per gallon. It should also be indexed to both inflation and improvements in vehicle efficiency, so that funding cannot lag decades behind the times again.

A Sorely Needed Fee

The funding the fuel tax provides currently simply isn’t enough. Inconsistent funding from the Highway Trust Fund have led to infrastructure projects being delayed for years or cancelled. If American infrastructure is to continue expanding and improving its infrastructure, the Highway Trust Fund must be consistently and sustainably funded.

The fuel tax is not a tax in the traditional sense. It more closely resembles a user fee: individuals pay the tax in equal measure to their utilization of the roadways, highways, and bridges, which the tax funds. A tax on fuel only affects those who drive cars.

Stable and consistent infrastructure funding is necessary for the U.S. economy to continue to grow and prosper. For that reason, simply increasing the tax will not be sufficient, as inflation will continue to fluctuate, and fuel efficiency will gradually improve. Indexing the fuel tax to both inflation and fuel efficiency ensures that the price of the fuel tax will not fall behind or stay higher than the level of the American economy.

Increasing the fuel tax may seem like a waste of time while fully electric vehicles are on the streets right now. The transfer to electric cars is still distant, though. Recent statistics indicate that electric cars make up less than one percent of all cars on the road, and less than two percent of new cars sales. This may be an issue for infrastructure funding in the distant future, but electric vehicles are far from endangering the usefulness of the fuel tax.
Federal Fuel Tax Issue Summary
(Microsoft Word Document)