NCPA - National Center for Policy Analysis


December 5, 2007

The 18.4 cents a gallon federal gas tax is perhaps the single worst influence on the development of rational transportation policies in the United States, and it should be eliminated, says David Strom, President of the Minnesota Free Market Institute.


  • In today's political climate gas taxes serve neither as legitimate "user fees" nor do they effectively serve to improve the overall efficiency and effectiveness of the movement of goods, services, and people.
  • Rather, they serve as earmarks, which, in the latest transportation bill, over 6000 of them diverted billions of dollars away from investments in basic infrastructure to the preferred projects of powerful Congressmen.

But earmarks are not the only or even the worst result of Federal involvement in transportation decision-making, says Strom:

  • Federal dollars also come with strings attached, which effectively force states to divert resources away from pressing transportation needs. 
  • Without huge infusions of Federal matching funds it would have been unthinkable to sink hundreds of millions of dollars into underperforming rail transit systems, for instance.

Ideally, we need to gradually introduce market pricing mechanisms into the funding mix; not only would this lead to fewer distortions in the allocations of resources, but the market signals that prices provide are a far better way to help policymakers match supply and demand, says Strom.  A properly designed pricing system could not only help eliminate congestion today, but it could also send signals to transportation planners regarding exactly where new investments should be made to satisfy demand.

Source: David Strom, "Eliminate the Federal Gas Tax,", December 4, 2007.

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