Much of Colorado’s existing 22 cents-per-gallon fuel tax does not maintain roads. Fuel taxes penalize less-wealthy drivers and encourage traffic congestion.
There are better ways to finance roads.
Instead of increasing taxes, the Colorado legislature should stop spending current fuel tax revenue on rail transit and other boondoggles. For every dollar from state and local fuel and vehicle taxes, more than 19 cents supports “mass transit purposes,” according to 2010 federal highway statistics. Just as non-drivers should not subsidize roads, drivers’ taxes should not subsidize other services.
Some argue that mass-transit benefits drivers by reducing traffic, so drivers should fund it. Nonsense. By such reasoning, government should force drivers to subsidize brakes for tractor-trailers because drivers benefit when huge trucks have functioning brakes.
The federal fuel tax is worse. “Only about 60 percent of the gas tax money … goes into highway and bridge construction,” former Transportation Secretary Mary Peters told PBS.
A Heritage Foundation analysis of the federal Highway Trust Fund (HTF) concurs: “[M]otorists will receive only about 62 percent of what they have paid into the fund for general purpose roads and safety programs.”
The HTF is worse for Colorado drivers, who send the fund much more than Colorado gets back. Colorado would be better off keeping those dollars in state. According to the Government Accountability Office, if Colorado could opt out of the 18.4 cents-per-gallon federal fuel tax, it “could achieve the same funding level” it receives from the HTF with a replacement tax of just 13.8 cents-per-gallon. That’s a 25 percent savings.
The Colorado legislature and Congressional delegation should work with other shortchanged states to opt out of the HTF. No longer would Coloradans send fuel and other taxes to Washington, only to get a fraction back with strings attached.
Regardless of how governments spend fuel tax revenue, imposing fuel taxes to finance roads is unfair to less-wealthy drivers, who tend to drive older, less fuel-efficient cars. Say “wealthy William” and “poor Paul” have the same commute in cars of similar weight. Their cars damage road surfaces by the same amount. But because Paul’s older car has lower gas mileage, Paul pays more fuel taxes, and hence subsidizes wealthy William.
Fuel taxes also promote traffic congestion, which wastes time and wealth. Rush hour occurs because the price for road use – fuel taxes – does not increase during peak-demand hours. Roads are then underutilized during off-peak hours, which is also wasteful.
How bad is congestion? Around Denver and Aurora, the annual travel time delay per commuter was 45 hours, consuming 20 gallons of fuel, reports the Texas Transportation Institute. Without congestion, you could spend this time and money on what you value most.
Instead of increasing taxes, Colorado’s legislature should explore better alternatives to road financing. The Independence Institute’s Citizens’ Budget project advocates expanding high-occupancy toll (HOT) lanes to all lanes on controlled-access expressways. These roads can become self-financing, and fuel tax revenues can be reallocated to lower-capacity roads.
Electronic tolling can reduce traffic congestion by decreasing tolls during off-peak hours. By charging for road use instead of fuel purchased, tolls don’t punish the “poor Pauls” with less fuel-efficient cars
Since toll payers shouldn’t pay twice for road use by first paying a fuel tax, Colorado should extend its fuel tax refund, so toll payers can recoup fuel taxes paid for miles they drove on toll roads.
Fuel taxes are unfair and wasteful. There are better alternatives. Instead of increasing the fuel tax, Colorado’s elected officials should ensure that its current revenue actually funds in-state roads, as required by the Colorado Constitution, rather than continuing to divert it to other purposes, and to other states.
Brian T. Schwartz, Ph.D. and Dennis Polhill, P.E. are senior fellows at the Independence Institute, a free market think tank in Denver
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