Primer on Motor Fuel Excise Taxes and the Role of Alternative Fuels and Energy Efficient Vehicles
8/24/2015
Motor fuel taxes were established to finance our nation's transportation infrastructure, yet evolving economic, political, and technological influences are constraining this ability. At the federal level, the Highway Trust Fund (HTF), which is primarily funded by motor fuel taxes, has become increasingly dependent on general fund contributions and short-term reauthorizations to prevent insolvency. As a result, there are discussions at both the federal and state levels in which stakeholders are examining the future of motor fuel excise taxes as well as the role of electric and alternative fuel vehicles in that future.
This report intends to provide an overview of motor fuel taxation, review its specific relationship to alternative fuel use and vehicle efficiency, and outline approaches that a number of states have taken to address these issues. The specific focus is on motor fuels used in over-the-road transportation, which accounted for approximately 82% of all energy used for transportation in the United States in 2014 (EIA 2015a). The report primarily provides context around federal fuel tax rules and rates, but analogies can be drawn to individual state programs.
Authors: Schroeder, A