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Plug-in vehicles and the future of road infrastructure funding in the United States

Jerome Dumortier
Assistant Professor, School of Public and Environmental Affairs
Indiana University-Purdue University Indianapolis
801 West Michigan Street, BS 4074
Indianapolis, IN 46202
Email: jdumorti@iupui.edu
Phone: 317-274-1817

Matthew Kent
Graduate Student
School of Public and Environmental Affairs
Indiana University-Purdue University Indianapolis
Email: mwkent@umail.iu.edu

Seth Payton
Assistant Professor, School of Public and Environmental Affairs
Indiana University-Purdue University Indianapolis
801 West Michigan Street, BS 4076
Indianapolis, IN 46202
Email: sbpayton@iupui.edu
Phone: 317-278-4898

Project Description

In the United States, road infrastructure funding is declining due to an increase in fuel efficiency and the non-adjustment of fuel taxes to inflation. Propositions to tax plug-in vehicles have been proposed or implemented in several states. Those propositions contradict policies that promote the sale of fuel-efficient vehicles. This paper assesses the impact of the decline in federal fuel tax revenue caused by plug-in vehicles and quantifies the amount of revenue that could be generated from a federal plug-in vehicle registration fee.

The researchers find that the contribution of plug-in vehicles to the decline of the federal fuel tax revenue is at most 1.56 percent. An additional tax of $50 to $200 per plug-in vehicle per year in the reference case would generate $188-$745 million in 2040, which represents an increase of 1.7 to 6.7 percent in federal fuel tax revenue compared to no tax. The lesson for policy makers is that plug-in vehicles do not contribute significantly to the funding shortfall in the short- and medium-run and a supplemental tax would generate a small percentage of additional revenue.

Click here to view the latest draft of the research paper.

Project Funding

Supported by the Soy Transporation Coalition