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

April 1, 2010

Tax Foundation Research Plastered in Editorial Sections This Week

March 12, 2009

2009 State Sales, Gasoline, Cigarette, and Alcohol Tax Rates

January 29, 2009

Tax Foundation in Last Week’s Editorial Pages … and the Best of the Blogosphere

January 26, 2009

Sales Tax Holidays: Politically Expedient but Poor Tax Policy

July 25, 2008

State-Run Lotteries Giving away Free Gas in Lieu of Cash

July 9, 2008

Toll Revenue vs. Motor Fuel Taxes by State, 2005

June 11, 2007

State Motor Fuel Tax Collections by State, 2006

June 7, 2007

Temporary Gasoline Tax Holidays: Relief for Motorists or Poor Tax Policy?

July 10, 2006

Gas Tax Revenues Surge in the States

May 11, 2006

Local, State and Federal Gas Taxes Consume 45.9 Cents Per Gallon on Average

September 13, 2005

Dates of Adoption of Major State Taxes

January 1, 2005

The Taxation of Energy in the U.S.: Who Pays?

March 1, 1994