Center for State Tax Policy

Oil, Gas, and Transportation Taxes

Gas taxes are typically used to fund infrastructure maintenance and new projects, but the share of state and local road spending that is covered by tolls, user fees, and taxes varies drastically. While politically unpopular, gas taxes, fees, and tolls are all relatively good applications of the benefit principle, the idea that taxpayers should benefit from the taxes and fees they pay. One of the primary issues, however, with both the federal and state gas tax is that they’re not indexed for inflation. As time goes on and inflation increases, the nominal value of the gas tax decreases, leaving states with budget shortfalls and unfunded infrastructure. States should attempt to fund infrastructure through user taxes and fees as much as possible, internalizing the costs associated with using the state’s transportation systems.


Related Articles

State Gasoline Tax Rates in 2017

January 27, 2017

Alaska’s Budget Shortfall Highlights Peculiarities of State Tax Code

January 26, 2017

Indiana Gas Tax Proposal: Existing User Taxes & Fees Cover Less than Half of Road Costs

January 11, 2017

State Tax Changes Taking Effect July 1, 2016

June 30, 2016

How Is Your State’s Road Spending Funded? (2016)

June 15, 2016

State Gasoline Tax Rates in 2016

March 3, 2016

Voters Eye Local Sales Tax Increase in Arkansas

February 29, 2016

How High Are Gas Taxes in Your State?

July 23, 2015

Michigan Voters to Consider Complex Tax Package

January 16, 2015

State Gasoline Tax Rates, 2009-2013

March 21, 2013

Facts & Figures 2013: How Does Your State Compare?

March 18, 2013

Virginia Legislators Approve Increases in Sales Tax, Car Tax, Regional Taxes

February 25, 2013

Virginia House Passes Modified Version of Governor McDonnell’s Transportation Plan

February 6, 2013

Gasoline Taxes and Tolls Pay for Only a Third of State & Local Road Spending

January 17, 2013

Every State a Net Recipient State for Federal Gasoline Taxes

October 27, 2011

From the Archives: Looking Back at Tax Foundation State Tax Research from 60 Years Ago

July 29, 2011

On Tax Holidays for Hurricanes and Gasoline

May 27, 2011

Rising Gasoline Prices Benefit a Few States

March 22, 2011

Map: State Gasoline Tax Rates, As of January 2010

June 7, 2010

State Sales, Gasoline, Cigarette, and Alcohol Tax Rates by State, 2000-2014

April 1, 2010