Moving Toward VMT to Replace Fuel Taxes

By: Rand Corporation

For nearly a century, federal and state gasoline and diesel taxes have provided the main source of revenue for funding the nation’s road network. But such taxes — typically levied on a cents-per-gallon basis — must be raised periodically to keep pace with inflation and improved fuel economy.

With the rise in anti-tax sentiment over the past several decades, elected officials have grown increasingly reluctant to take on this unpopular task. Thus, fuel tax receipts, measured in real dollars per mile of travel, have fallen precipitously, leaving insufficient revenue to maintain, let alone expand, the road network. This decline will likely accelerate in future decades as conventional vehicles become more efficient and as alternative fuel options (e.g., electric cars) are introduced and gain market share.

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