- December 1, 2012
As the number of electric cars increases in Florida and nationwide, states and the federal government soon will face another financial dilemma: what to do about declining gas-tax revenue.
In Florida, the average total state gas tax rate is 36.7 cents a gallon. That generates about $4 billion a year to pay for Florida’s roads.
But as vehicles get more fuel efficient and more consumers switch to electric cars, we will pay less in fuel taxes for using the same amount of roads. Combining data from the Energy Information Administration and Bloomberg, Florida would need to raise the gas tax to 75.6 cents a gallon by 2050 just to keep revenue even.
But a new revenue scheme is gaining traction: mileage-based user fees, sometimes called a road-user charge. This is the concept of charging road users based on distance traveled rather than the per-gallon gas tax.
Here are five major advantages to user fees:
The fuel tax has been a successful user fee, but its days are numbered. As an alternative, mileage-based user fees are being tested in pilot projects or used in limited cases. There are still technology, system design and cost issues to be resolved.
New Zealand and Germany have a distance-based fee for trucks. Australia and several European countries are doing pilot projects on applying mileage fees to passenger vehicles.
In the U.S., states have been testing MBUFs for more than a decade. Six years ago, the Fixing America’s Surface Transportation Act created Surface Transportation System Funding Alternatives, a federal program that awards tax dollars to states to accelerate testing of mileage-based fees.
Research by RAND and by the states of Oregon, Washington and North Carolina found that rural drivers benefit from a shift to mileage-based fees and would pay slightly less. This is appropriate because rural roads also tend to be less expensive to build and maintain than urban ones.
Some environmental groups are worried that MBUFs will discourage purchase of electric vehicles.
Currently, electric car drivers avoid paying fuel taxes. Asking them to pay a fee for the roads they use is reasonable and fair to other drivers. States that have imposed road-use charges on electric vehicles report no change in the trend of EV adoption.
MBUFs are a long-term replacement for the gas tax. In the meantime, it is important to continue state pilots, expanding their scale and scope and starting to address the transition issues.
A national MBUF pilot could be helpful if well designed and executed, which would allow for larger-scale and more extensive testing. A national MBUF pilot should build on the experience of the states.
Adrian Moore is vice president of Reason Foundation and lives in Sarasota.