What's problem electrified vehicles cause for highway funding
By: +David Herron; Date: 2021-01-03T23:53:30.233Z
Tags: EV Taxes
Does the shift to electrified vehicles cause a problem in funding the highway system?
As the transportation fleet shifts to electrified vehicles the equation of vehicle miles driven and gasoline tax revenue is changing. Hybrid cars use less gasoline per mile driven. In general the government policy is to push the vehicle fleet towards high fuel efficiency vehicles, whether they're hybrids, plug-in hybrids, all electric or whatever. The new CAFE standard means that over time governments are going to see shrinking gasoline tax revenue while vehicle miles driven should stay the same per capita.
Why? Higher fuel efficiency means fewer gallons of gasoline are burned per mile of driving.
Obviously the highway fund across the US is going to see a revenue shortfall. The highway system is already underfunded with many fearing for the effect of a crumbling infrastructure. For these and other reasons, such as the reluctance to increase gasoline taxes, and the economic recession, transportation budgets around the U.S. is weakening.
It�s undeniable that the roads and highways provide a huge benefit, connecting us together for many purposes not to the least of which is carrying goods and services for commerce. The roads don�t build themselves, instead they cost a lot of money to build and maintain.
The current system is based on an assumption that�s slowly becoming untrue, as fuel efficiency rises. The ratio of gasoline burned per mile of driving is changing. While that is a huge positive win on many levels, it decreases the gasoline tax revenue.
We want less gasoline to be burned, and we want the highway system to exist and be adequately funded.
Over the long term fuel taxes will become a less efficient method of collecting highway taxes. Add to that the fact that fuel taxes have not changed in 20 years or more. Additionally, the effect of inflation is to decrease the value of the money that is collected. The result is that the U.S. highway and transportation systems are being slowly starved of funds.