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Wednesday, July 30, 2008
 
Sin Tax

An NPR story the other day focused on how federal highway funds are drying up because people are driving their cars less.

This is an issue that hasn't received a lot of public scrutiny: gasoline taxes are essentially highway user fees, and federal highway funds depend on people driving a certain number of miles on those highways each year.

It's a problem now, but nothing compared with what will happen when alternative-fuel vehicles start to comprise a significant percentage of cars on the road. After all, if you drive an electric car, or a hydrogen fuel-cell car, or even a car or truck fueled with red diesel, you're not paying into the highway-construction trust fund.

Assuming that gasoline-powered vehicles will be supplanted over time by other technologies, what's the fairest way to assess the user fee? Toll roads? A federal automobile licensing fee? Increased revenues from the general fund?

At what point to do you end gasoline taxes because they discriminate against people who own internal-combustion engines? Or do you keep them in place as a sin tax, in order to herd people into newer, cleaner technologies?



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