Revisiting the Fuel Tax–Based Transportation Funding System in the United States

Zhirong J Zhao, Hai Guo, David Coyle, Ferrol Robinson, Lee Munnich

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


Increasing concerns are noted over the current transportation funding system based on fuel taxes, but there has been little scholarly literature that evaluates the fuel tax system in a comprehensive manner. As a synthesis, this article reviews the background of fuel taxes designated for transportation and examines issues related to the fuel taxes with four tax-evaluation principles, including economic efficiency, social equity, revenue adequacy, and political and administrative feasibility. Although the analysis does not indicate an absolute denial of fuel taxes as a revenue source to support transportation, it shows that the current transportation funding system based on fuel taxes is no longer sustainable with the rapid erosion of fuel tax base.

Original languageEnglish (US)
Pages (from-to)105-126
Number of pages22
JournalPublic Works Management and Policy
Issue number2
StatePublished - Apr 1 2015

Bibliographical note

Funding Information:
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The manuscript was derived from a research report entitled “From Fuel Taxes to Mileage-Based User Fees: Rationale, Technology, and Transitional Issues,” which was supported by the Intelligent Transportation Systems program, US Department of Transportation.

Funding Information:
At the state level, the fuel tax funding system in many ways works much the same as at the federal level with portions of state fuel tax receipts being dedicated or earmarked for state highways, roads, and mass transit. However, states also fund surface transportation improvements through other state transportation user fees such as registration and vehicle sales taxes, as well as general sales taxes and state and local general fund revenues. States also receive some of their transportation funding from the federal Highway Trust Fund. At the same time, several states also use portions of their fuel tax revenue for general, non-highway, and non-transit purposes. According to the most recent Federal Highway Administration Highway Statistics, approximately 10% of all state fuel tax receipts collected in the United States go toward general and non-highway purposes ().

Publisher Copyright:
© The Author(s) 2014.


  • fuel taxes
  • highway user fees
  • infrastructure finance
  • tax analysis
  • transportation funding


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