Freakonomics Radio

Freakonomics: Doing a U-turn on the gas tax

Marketplace Contributor Feb 20, 2013
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Freakonomics Radio

Freakonomics: Doing a U-turn on the gas tax

Marketplace Contributor Feb 20, 2013
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The cars we drive today are more fuel-efficient than ever, and that would seem to be great news for everyone. But here’s one downside: transportation budgets are heavily powered by the gas tax.

And right now, the nation relies extremely heavily on gas taxes for transportation funding,” according to Jaime Rall, from the National Conference of State Legislatures. She says that better fuel mileage means less money for roads and bridges. “Advancements in fuel efficiency pose some real problems for transportation budgets.”

Plus, the gas tax isn’t a percentage but rather a fixed amount — which, because no politician wants to raise the gas tax, has been stuck at 18 cents a gallon for 20 years.

So what should be done about it? The most sensible may also be a hard sell: billing drivers based on their mileage.

“At least 18 states have pursued pilot projects,” says Rall. “And in the past five years, legislatures in at least 11 states have considered more than 20 proposals to establish or study state level fees of this kind.”

Another idea, ready for import from Finland, is to base traffic fines on the driver’s salary. Just a few tickets from a few speeding billionaires could help balance any budget in a hurry!

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