States Grapple With Declining Gas Tax Revenue, Consider Pay-To-Drive Solutions

Written By BlabberBuzz | Wednesday, 28 June 2023 04:30 PM
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States Grapple With Declining Gas Tax Revenue, Consider Pay-To-Drive Solutions

As states grapple with declining revenue from gas taxes, they are exploring alternative methods to fund transportation infrastructure.

One such option gaining traction is charging motorists taxes based on the number of miles driven rather than the amount of gas purchased. This shift is driven by the rise of electric vehicles, fuel efficiency, and inflation, contributing to decreased gas tax revenue.

According to the Associated Press, states heavily rely on gas taxes to maintain their roads. However, the decline in revenue has prompted them to seek new ways to generate funds. The Biden administration is set to launch a pilot program funded by the federal infrastructure package, which aims to explore the feasibility of charging motorists by the mile.

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Several states have already implemented mileage-based taxes to address the revenue shortfall. Oregon, Virginia, and Utah have successfully generated tax revenue from road usage, and Hawaii is poised to become the fourth state to adopt this approach. Failure to find alternative revenue sources could result in a staggering $67 billion tax deficiency for transportation by 2050, warns Boston-based CDM Smith.

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States have implemented temporary measures such as increasing vehicle registration fees to compensate for the shortfall. Electric vehicle owners have also seen increased costs as states impose electricity taxes on public charging stations.

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Some states even consider imposing a tax on package deliveries to further boost revenue. Colorado, for example, introduced a 27-cent tax on home deliveries from online retailers like Amazon last year to bolster its transportation budget, as reported by Fox Business.

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Furthermore, electronic toll systems are being tested in multiple states as an additional means of generating revenue.

These developments come as the Biden administration aims to achieve "net zero" carbon emissions by 2030, which involves reducing reliance on fossil fuels. As the transportation sector plays a significant role in carbon emissions, exploring alternative funding mechanisms becomes crucial in aligning with this ambitious goal.

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