Why Gas Tax Revenue has Dropped

Tesla electric cars can charge up at Bel Air Mall in Mobile. They and other fuel efficient vehicles, like hybrids, are great for the environment but horrible for Alabama’s highway finances.

Increased fuel efficiency is behind the current push for higher gas taxes.

A legislative transportation committee is holding meetings throughout the state on the issue. Rep. Mac McCutcheon, R-Capshaw, heads Alabama Legislature’s Joint Transportation Committee.
“We have not had the state gas tax on the fuel addressed since 1992,” McCutcheon said.

In 1992, when gas sold for not much more than a dollar a gallon, Alabama set its gas tax at 18-cents per gallon. As a per-gallon cost, rather than a percentage, revenue didn’t rise as gas prices soared over the next twenty years.

Just the opposite happened. Gas tax revenue decreased as cars became more fuel efficient.

In 1992, the average new car got 27.9 miles-per-gallon.

So to travel a thousand miles in that car in Alabama, it took 35.8 gallons of gas, and the consumer paid $6.44 in gas tax

In 2014, a new model car averaged more than 36 miles per gallon, so that same trip took just 27.5 gallons, and consumers paid $4.94 in gas tax.

But remember too, that $6.44 in 1992 dollars, due to inflation, equals $10.46 in 2014 dollars.

So consumers in 2014 who were paying $4.94 in gas tax for that thousand miles, were actually paying only about 47-percent of what they would have in 1992.

“We need 12 cents just to bring us back to level,” said McCutcheon.

So a 12-cent increase will be proposed when the legislature resumes next month. Money would be earmarked for road and bridge construction and improvement.

McCutcheon says there will also be an effort to somehow tax those electric cars.

“It’s got a tire that rolls down the road and wears out the asphalt just like a gasoline powered vehicle would.”

 

 

 

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