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Center for Advancing Research in Transportation Emissions, Energy, and Health (CARTEEH)

A USDOT University Transportation Center

Fuel Taxes

Federal and state governments place taxes on fuel products, ultimately making fuel and gas prices a little more expensive for the consumer.1 The purpose of fuel taxes is to discourage the production and purchasing of motor vehicles that use fuel insufficiently.2 The federal government places taxes on fuel to help pay for road infrastructure and projects.3 The average fuel tax is about 31 cents a gallon.

Considering this strategy will help achieve the goal of the following objectives

  • Less Contamination
  • Less Emissions
  • Less Traffic Noise
  • Connectivity and Inclusion
  • Healthy Destinations
  • Less Traffic Violence
  • Active Transportation
  • Green Space

Transportation lifecycle phases

This strategy is associated with the following transportation lifecycle phases:

  • Construction
  • End of Life
  • Maintenance
  • Material Selection
  • Operations
  • Policy and Planning
  • Project Development

Who's involved

  • Car owners
  • Federal agencies
  • Policymakers
Federal and state governments place taxes on fuel products, ultimately making fuel and gas prices a little more expensive for the consumer.1 The purpose of fuel taxes is to discourage the production and purchasing of motor vehicles that use fuel insufficiently. The federal government places taxes on fuel to help pay for road infrastructure and projects.2 The average fuel tax is about 31 cents a gallon.

How it Helps

Increasing gas and fuel prices will ultimately lead to a decrease in fuel consumption, thus decreasing overall pollution levels, as well as encouraging people to use other modes of transportation such as walking, biking, or public transit. This also contributes to funding for needed road repairs caused by motor vehicles which can lead to safer roadways.2

Implementing

Federal Government:

Fuel taxes are something that is currently in effect and is a federal and state-level issue. One recommendation is to increase the fuel tax to switch the focus on purchasing a vehicle to using other modes of transportation.1

Equity Concerns:

It is important to consider how fuel taxes can impact people of have lower socioeconomic statuses. In 2009, fuel taxes caused individuals an out-of-pocket charge of about $180 per car. This causes low-income individuals to spend their already limited resources on taxes which can be very burdensome. This is something to consider when implementing higher fuel taxes in certain states or counties that are made up of majority lower income individuals.3

Examples

1) Article on Fuel Taxes in Texas

This article describes the impact of motor vehicle taxes in Texas and how these taxes directly affect transportation and some of its major densely populated cities.

https://comptroller.texas.gov/economy/fiscal-notes/2019/jul/motor-fuels-taxes.php

1. Institute on Taxation and Economic Policy. (2014). The Federal Gas Tax: Long Overdue for Reform. https://itep.org/the-federal-gas-tax-long-overdue-for-reform/?gclid=CjwKCAjwiJqWBhBdEiwAtESPaI7S6VhlnLNWlyr7qTqW9KGxQniYT_VtRaONnpaMGhqoRnbH5D5DpxoCigcQAvD_BwE
2. Barkley, T. (2022). Gas Taxes and What You Need to Know. Investopedia. https://www.investopedia.com/gas-taxes-and-what-you-need-to-know-
3. Schweitzer, L. (2009). The Empirical Research on the Social Equity of Gas Taxes, Emission Fees, and Congestion Charges. https://onlinepubs.trb.org/onlinepubs/sr/sr303Schweitzer.pdf