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“If raising revenue by increasing fuel taxes were a viable option, states and the federal government would have done so already”

remains stable, the level of inflation-adjusted revenue is flat. However, if the product consumed is being taxed and the consumption of that product decreases, tax revenues likewise decrease. The consumption of fuel is decreas- ing dramatically irrespective of the increases in the vehi- cle fleet, population and number of households. Due to these combined factors, overall fuel consumption per mile traveled is decreasing rapidly across the United States and other countries around the world. Accounting for inflation is important in roadway revenue

sources, but accounting for increasing fuel efficiencies is no less vital. You may want to raise prices above inflation, and get accused of gouging road users with high taxes, but it simply exacerbates the problem by encouraging still more motorists to shift to more fuel efficient vehicles or those that do not use taxed fuels. Again, those least able to afford to buy a new vehicles face paying the most.

4. Raising fuel taxes to provide sustainable funding and improve environmental impacts of auto use is an inherently self-contradictory policy Mr. Armstrong asserts that the decline in road revenues can be addressed by raising fuel taxes substantially, and that doing so would also improve the environment by discourag- ing fuel consumption. This is an inherently self-contradic- tory argument. It is true that raising gas taxes will raise short-term reve-

nues, and that some fuel tax increase may be a valid interme- diate step before RUC is introduced or as part of a transition plan to RUC. Matthew Dorfman mentioned this point in his article. But raising taxes is always difficult politically, made all the more difficult by the need to repeatedly increase rates every 1-2 years to keep up with declining fuel consumption. The UK, which Mr. Armstrong cites as an example for

the US to follow, has one of the highest fuel excise taxes in Europe. However, the UK has no hypothecation, e.g. ring fencing of fuel taxes for transportation, nor any concept of a Highway or Motorway Trust Fund. All fuel tax revenue goes to the Treasury General Fund. Only 20 per cent of the total taxes garnered from fuel taxes and other transport related taxes (approximately US$76billion) are spent on transporta- tion, and only half of that is spent on roads. The UK also has specific environmental policies that pro-

mote fuel efficiencies, particularly around taxes on own- ership of vehicles based on emission ratings, not fuel tax. There is no link between fuel excise taxes and environmen- tally friendly vehicles in the UK written policy. Indeed, since the 2010 General Election, the coalition Government led


by David Cameron has been unable, politically, to raise fuel tax at all, and has actually lowered it by 1p per liter due to concerns over the economic effects of the high price of fuel, 63 per cent of which is due to fuel taxation. It has had to repeal inflation based fuel tax increases approved by the pre- vious Brown government, and it is likely that there will be no increases in fuel tax in the UK, at all, before the 2015 General Election. It appears that the UK has reached the political lim- its of being able to raise fuel tax. Raising the fuel tax in order to incentivize drivers to switch

to more fuel-efficient vehicles will only compound and accel- erate the erosion of the highway funds. Accelerating the take up of fuel-efficient vehicles is a laudable goal, but focusing on only raising the gas tax, while neglecting to address the need to simultaneously transition to RUC, will not solve the funding challenge. In addition, if raising revenue by increasing fuel taxes were

a viable option, states and the federal government would have done so already. The political stalemate on raising fuel taxes has not been resolved despite the fact that there has been no federal fuel tax increase since 1993. It is hard to contemplate how this aversion to raising the fuel tax will be resolved by raising the federal tax to an inflation adjusted rate compris- ing an overnight increase from US$0.184 to US$0.281 per gallon as Mr. Armstrong proposes. Another drawback to increasing state and federal gas tax

rates is the inequity it creates. Lower income households tend to have older, less fuel-efficient cars. Thus, they are already paying proportionately more in fuel tax per mile driven than their wealthier neighbors. Raising the fuel tax would exac- erbate this inequity and further economically disadvantage lower income households. According to the American Petroleum Institute2

, the US

average tax per gallon was 49.5 cents in July 2013. With gas prices about US$4 per gallon, this means only 12.5 per cent of the price is due to tax. The other 87.5 per cent are the cost of oil, refining, and distribution. Increasing fuel taxes is a futile way to raise funds as it will further hasten the adoption of fuel efficient vehicles, resulting in ever declining fuel tax revenues per mile driven.

5. Diverse, affordable, flexible, adaptable off-the-shelf technologies for RUC exist today Technology to implement RUC exists today. Will it change in 10 years? Absolutely! All technology will change over the next ten years, and the 10 years after that, and so on. Mr. Armstrong’s argument to wait for better technology in the next 10 years is a true statement, but leads to future Vol 8 No 3 North America

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