IV. Trends and Forecasts of Highway User Revenues


What Are Highway User Charges?

Highway user charges are fees imposed primarily upon highway vehicles, motor fuels, drivers and other elements of highway use. Although highway user fees predominantly are used to finance highway and related improvements, in many States fuel taxes and related fees charged to highway users are used for nonhighway purposes. In HCASs, the term highway user fee takes on special significance because a primary purpose of cost allocation studies is to determine whether various classes of highway users are paying a proportionate share of their highway cost responsibility.

User fees and bonds secured by highway user fees have been the predominant source of funds to finance highway improvements in most States since the early 1920s, but it was not until the Highway Revenue Act of 1956 that user fees became the major source of Federal funds for highways. Fees on highway users do not have to be deposited in a dedicated trust fund to be considered HURs. In some States a portion of the motor fuel tax or other tax on highway users may be dedicated to purposes other than highways or related transportation purposes. While highway users do not differentiate between fees going for highway purposes and those that go for non-highway purposes, the fees used for non-highway purposes are not dedicated user fees. The first Federal fuel tax was imposed in 1932, but proceeds were placed in the General Treasury Fund where they were commingled with other general funds.

The Federal highway user tax structure should be evaluated within the context of the overall national highway taxation and funding program, administered cooperatively by all levels of government. Table IV-1 provides an overview of this national system. Federal, State, and local HURs are compared with obligations or expenditures for highways and transit at each of the three levels of government for the base year of 1994 as well as for the Year 2000. The assumptions and procedures used in deriving the forecasts are described later in this chapter.

To provide a complete overview, Table IV-1 shows both revenues and expenditures defined in a comprehensive manner. User revenues included all taxes and fees imposed specifically on motor vehicles and their use. The table does not include general taxes imposed widely on other sectors, such as income or sales taxes, but does include taxes that are not used for highways or transit. For example, motor fuel taxes devoted to deficit reduction at the Federal level and State fees that provide general support to local governments are included in the table. Similarly, a broad range of highway-related functions, such as maintenance, motor vehicle administration, and highway patrol, are included regardless of the source of funding, as are all transit programs funded from highway user taxes. The table reports taxes at the level of government responsible for imposing the taxes, and reports obligations or expenditures at the level of government responsible for the program rather than at the level of government actually administering the construction or operation programs.

Table IV-1. Comparison of Overall National HURs and Obligations or Expenditures for All Levels of Government for 1994 and 2000 ($ Billion)

Year and Category

Federal

State

Local

All Levels

1994 HURs:

Used for Highways & Transit

Other Uses

Totals

1994 Obligations or Expenditures:

From User Revenues

From Other Sources

Totals

 

21.0

11.0

31.0

 

21.0

1.3

22.0

 

43.0

7.5

50.0

 

45.0

5.0

50.0

 

2.2

0.1

2.4

 

2.2

23.0

25.0

 

66.0

18.0

84.0

 

68.0

29.0

97.0

2000 HURs:

Used for Highways & Transit

Other Uses

Totals

2000 Obligations or Expenditures:

From User Revenues

From Other Sources

Totals

 

27.0

13.0

41.0

 

27.0

1.6

29.0

 

62.0

12.0

74.0

 

62.0

5.0

67.0

 

3.3

0.2

3.5

 

3.3

27.0

30.0

 

92.0

25.0

118.0

 

92.0

33.0

125.0

At the Federal level, Table IV-1 shows that 1994 HURs substantially exceeded Federal obligations, which include all highway and transit Federal-aid to State and local governments supported from highway user taxes and other sources, as well as direct Federal construction, maintenance, and operation of Federal roads. The primary reason for this is that $10.5 billion of motor fuel taxes is used for deficit reduction and the LUST fund. Fuel tax support for deficit reduction is assumed to continue through the Year 2000 and beyond in this table. Federal revenues are shown growing at the lowest rate because the policy assumption for the base case is that no change occurs in the existing Federal tax structure.

At the State level, 1994 HURs almost exactly equaled expenditures of user revenues for highways and transit. This balance reflects a general users pay policy at the State level. However, many States differ in either direction from this. Some States have user revenues that exceed State expenditures for highway and transit by as much as 10 percent or more; and several other States earmark specific non-user revenues for highways or use substantial amounts of general revenues that significantly exceed State highway and transit expenditures. In contrast to the Federal level, many States do not earmark user taxes, although most States have special accounts and several States have constitutional restrictions that prohibit the use of most or all user taxes for non-highway purposes. Because State HURs are growing more rapidly than State highway expenditures and because of increasing revenue demands for other State programs, a significant surplus of State user revenues over State expenditures for highways and transit is anticipated by 2000, based on extrapolation of recent trends, as described later in this chapter.

At the local level, 1994 user fee revenues were only about 10 percent of expenditures for highways and transit from highway user fees. Since these data do not include much larger transit expenditures by local governments from other sources, the imbalance between revenues and expenditures is significantly understated for overall local surface transportation programs. A reason for this imbalance is that at the local level, construction on major roads is commonly supported with funds from higher levels of government, and construction on minor roads is commonly performed by private developers or land owners. Some increase in local user fees has been occurring in recent years, however, as several States have made highway user fee sources available to local governments, often on a local option basis. Local user revenues are projected to increase more rapidly than local expenditures in percentage terms; however, the absolute dollar gap is expected to grow significantly.

For all levels of government as a whole, 1994 HURs covered only 87 percent of highway and transit expenditures from user revenues despite the broad definition of user revenues used in the table. However, revenues are expected to grow more rapidly than expenditures at each level of government, increasing to about 94 percent of expenditures by 2000 for all levels of government as a whole.

The balance sheet shown in Table IV-1 provides only very summary data and ignores external benefits and costs not included in governmental program revenues and expenditures. These external benefits and costs are equally important, although more difficult to assess, as described in detail previously in Chapter III.

Treatment of Fees Used for Non-Highway Purposes

Previous Federal HCASs have not had to address the issue of how to treat fuel taxes or other user fees that were used for non-highway purposes. State studies have handled this situation in several ways. Some States have not considered the portion of HURs that was used for non-highway purposes in their studies under the philosophy that the cost allocation study is focusing on highway costs attributable to different vehicle classes and should only consider that portion of revenues that is used to finance those costs. Other States have analyzed user fee equity both with and without consideration of user fees that are used for other purposes. The most comprehensive State studies include all fees imposed specifically on highway users regardless of how they are used and all highway- and transit-related expenditures regardless of source of funding, so that the net balance between user revenues and highway-related expenditures is clearly shown.

The 1997 Federal HCAS is complicated by the portion of Federal taxes on gasoline and diesel fuel that is dedicated to deficit reduction. This situation is somewhat different from that in many of the States that have a portion of their highway user fees dedicated to non-highway purposes because the Federal fee is not only on highway fuel usage, but includes fuels used by railroads and barges as well. Thus this tax does not fit the true definition of a highway user fee, but rather, the tax should be termed a "transportation user fee." The legislative history of the deficit reduction tax makes it clear that the tax was not originally intended to be a user fee. Initially the tax was to be a broad-based energy tax that would have applied to coal, natural gas, and other forms of energy as well as to petroleum-based fuels like gasoline and diesel fuels. That the tax ended up being imposed only on gasoline and diesel fuels does not diminish the fact that it never was intended to be a tax only on highway users.

Regardless of the legislative history and the fact that the deficit reduction tax does not meet the formal definition of a highway user fee, some interest groups have argued strongly that they pay this tax and that it should be considered in the study. Perhaps most importantly, the deficit reduction tax does affect equity among classes of users and does affect efficiency, regardless of legislative intent. To evaluate the sensitivity of outcomes of this study to whether the deficit reduction tax is included or excluded from the analysis, several tables throughout the report will show results both with and without consideration of deficit reduction tax revenues. In general, the analysis in the 1997 Federal HCAS excludes the deficit reduction portion of the current fuel tax, unless noted otherwise.

Current Federal Revenue Sources

Since 1956, Federal taxes have been collected from the highway user which have been segregated from other Federal revenues in the HTF. The HTF is a separate fund for the specific purpose of providing separate financing for the construction of public highways and for highway safety related expenditures. Current Federal taxes are assessed on the sale of motor fuel, on the sale of heavier tires, on the new sales of the heaviest trucks and trailers, and on the annual registration of the heaviest vehicles. Each of these revenue sources will be discussed in turn as well as a brief discussion of exemptions from these taxes. The rate of tax on a particular item coupled with the boundary conditions of the tax can target the tax toward certain vehicles. The combination of taxes can approximate the cost responsibility of the majority of the highway users, if they are broadly grouped. The small number of taxing instruments precludes a more precise matching of cost and payments.

Motor Fuel Taxes

Motor fuel taxes comprise the largest portion of the HTF receipts. The Federal tax on gasoline is well known to the general public. The similar tax is imposed on diesel fuel, gasohol and other highway fuels. These taxes are collected from the refiner, manufacturer or importer of the fuel and passed through the retailer to the highway user. The current tax rate on motor fuels includes 4.3 cents per gallon which goes to the General Fund for the purposes of deficit reduction, not to the HTF. Further, of the taxes on motor fuel that are transferred to the HTF, 2.0 cents per gallon is placed in a separate account within the HTF for mass transit purposes only. This is the MTA. The remainder of the taxes transferred to the HTF remain in the Highway Account.

The present Federal tax rate on gasoline is 18.3 cents per gallon. (Each State also collects tax on each gallon of gasoline, and the present weighted average of the State taxes is 18.68 cents per gallon.) Currently, 14 cents per gallon accrues to the HTF and, of that, 12 cents per gallon are retained in the Highway Account. In 1994, the net HTF receipts from the Federal excise tax on gasoline were about $10 billion, well over half the total HTF receipts for the year.

The present Federal tax rate on highway use of diesel fuel is 24.3 cents per gallon. The weighted State average diesel fuel tax rate is 19.03 cents per gallon. Currently, 20 cents per gallon of the Federal tax accrues to the HTF and 18 cents per gallon to the Highway Account. Non-highway use of diesel fuel is usually exempt from the highway user taxes. Typical exempt practices include the off-road operation of farm and construction vehicles and stationary fuel uses such as electric generators. Also, heating oil #2 is similar to diesel fuel and is not taxed but can be used by the unscrupulous in lieu of taxed diesel fuel. In 1994, the net HTF receipts from the Federal excise tax on diesel fuel used on the public highways was about $4 billion, the second largest source of revenue to the HTF after gasoline fuel tax.

In 1984, the DRA instituted a higher tax rate on diesel fuel compared to gasoline. Previously, gasoline and diesel fuel had been treated identically under the tax code. The increased diesel fuel tax is referred to as the diesel differential and is 6 cents per gallon. The diesel differential was added to increase the share of highway revenue pay by the heavier trucks. The diesel differential was adopted in lieu of significantly higher HVUT specified by the STAA. The maximum HVUT under STAA was $1,900 annually per vehicle, the DRA set the maximum for the HVUT at $550 per vehicle. The diesel differential was enacted prior to collection of the higher HVUT.

Beginning with the Energy Tax Act of 1978, blends of gasoline with grain alcohol (ethanol) have received separate tax treatment even though the blends, called gasohol, are substitutable for gasoline without any vehicle modification. Initially, blends that contained 10 percent ethanol were eligible for a complete exemption from the corresponding highway user tax of 4 cents per gallon. Since then the tax rate on motor fuel has increased and the exemption has been adjusted several times, and the current exemption for 10 percent blends is 5.4 cents per gallon. Effective January 1, 1993, the Energy Policy Act of 1992 (EPACT) pro rated the exemption to include alcohol blends of 7.7 percent and 5.7 percent which correspond to 2.7 percent and 2.0 percent oxygen by weight, respectively. These levels of oxygen are the oxygen levels required in reformulated gasoline and oxygenated gasoline which are mandated in certain areas that fail to meet national air quality standards. (See discussion of exemptions for further information about the gasohol exemption in this chapter.) Based on the ethanol content, 8 cents per gallon, 9.842 cents per gallon or 10.922 cents per gallon of the Federal excise tax on gasohol blends accrues to the HTF. Of these amounts, 6 cents, 7.842 cents or 8.922 cents per gallon is credited to the Highway Account. The total HTF receipts from the various types of gasohol in 1994 was nearly $1 billion. This is expected to double by 2000.

Other fuels used to power motor vehicles on the public highway are generally taxed at the same rate as gasoline, currently 18.3 cents per gallon. The most common of these fuels is propane. Neat alcohol (defined as at least 85 percent ethanol or methanol) is given separate tax treatment, but current use of these fuels is minimal. Compressed natural gas (CNG) is not currently taxed for highway purposes, although it is used in some buses, trucks, and autos/pick-ups. Also, electricity is not currently taxed for highway purposes, although there are a small number of electric vehicles in use on the public highway. For any of these alternative fuels which are taxed, 2 cents per gallon of the amount transferred to the HTF is segregated for mass transit purposes. In 1994, the total HTF receipts from the remainder of the motor fuels was about $30 million, nearly all of this was derived from the taxes assessed on highway use of propane. However, these fuels could become more prominent as alternatively fueled vehicles enter the vehicle fleet to satisfy the requirements of the Clean Air Act of 1990 and EPACT. Table IV-2 illustrates the current (as of December 1996) distribution of Federal motor fuel taxes by the Highway Trust and General Funds.

Other Federal Highway Taxes

There is a Federal excise tax of 12 percent of the retail sales price on trucks which have a GVW of more than 33,000 pounds and on trailers, semitrailers and power units which, when used in combination with other equipment, have a GVW of more than 26,000 pounds. House trailers, hearses, ambulances and self-propelled motor homes are excluded from this retail sales tax. (See the discussion of exemptions for more details of exemptions from this tax in the chapter.) In 1994, about $1.4 billion was credited to the HTF as a result of this tax. This tax is the only HTF revenue source that will "keep pace with inflation" because it is based on a percentage of the retail price of the heaviest vehicles.

There is an annual fee on vehicles 55,000 pounds or more GVW, called the HVUT. This fee is collected from the heaviest vehicles which travel more than 5,000 miles per year on the public highways. The fee is $100 per vehicle for vehicles with a GVW of 55,000 pounds, increasing at the rate of $22 per thousand pounds or fraction thereof, with a maximum annual fee of $550 per vehicle for all vehicles with a gross weight of 75,000 pounds or more. This annual fee is pro rated for vehicles acquired part way through the year. (See the discussion of exemptions for the details of categories of exempt vehicles in this chapter.)

Table IV-2. Distribution of Federal Highway Motor Fuel Taxes (as of December 1996)
 

Distribution of Tax (cents/gallon)

HTF

General Fund For:

Highway Account

MTA

Deficit Reduction

Not Specified

Fuel Type

Tax Rate

Effective Date

Gasoline 18.3 cents per gallon

1/1/96

12

2

4.3

 
Diesel 24.3 cents per gallon

1/1/96

18

2

4.3

0

Gasohol: 10 percent Gasohol made with Ethanol1 12.9 cents per gallon

1/1/96

6

2

4.3

0.6

Gasohol: 7.7 percent Gasohol made with Ethanol2 14.142 cents per gallon

1/1/96

7.842

2

4.3

0

Gasohol: 5.7 percent Gasohol made with Ethanol3 15.222 cents per gallon

1/1/96

8.922

2

4.3

0

LPG (Propane) 18.3 cents per gallon

10/1/95

12

2

4.3

0

CNG 4.3 cents per gallon

10/1/93

0

0

4.3

0

LNG4 18.3 cents per gallon

1/1/96

12

2

4.3

0

Ethanol5 (From Natural Gas) 11.3 cents per gallon

1/1/96

5

2

4.3

0

Methanol6 (From Natural Gas) 11.3 cents per gallon

1/1/96

5

2

4.3

0

  1. Highway Statistics Table FE-21: Federal Excise Taxes on Highway Motor Fuel.
  2. Tax rate for Gasohol from methanol is slightly lower.
  3. Tax rate for Gasohol from methanol is slightly lower.
  4. From the "Special Fuel Other" category of the Highway Statistic Table FE-21.
  5. Not From Natural Gas Tax rates are slightly lower.
  6. Not From Natural Gas Tax rates are slightly lower.

In 1994, the HVUT was slightly more than $600 million. In 2000, the HVUT is expected to be in excess of $800 million.

There is a Federal excise tax on the sale of heavier tires. This tax is collected from the manufacturer or importer and passed on to the retailer and the ultimate consumer. The tax is based on the weight of the tire, excluding the tire rim. The Federal excise tax on tires is 15 cents per pound for each pound in excess of 40 pounds, up to a total weight of 70 pounds. For tires that weigh between 70 and 90 pounds, the Federal excise tax is $4.50 plus 30 cents per pound for each pound in excess of 70 pounds. For tires over 90 pounds in weight, the Federal excise tax is $10.50 plus 50 cents per pound for each pound in excess of 90 pounds. In 1994, the Federal excise tax on tires contributed over $300 million to the HTF. By 2000, the Federal excise tax on tires is expected to be over $400 million per year. Table IV-3 highlights the tax rates (as of December 1996) for all Federal highway user taxes.

Exemptions from the Federal Taxes

The HTF is designed to be a user financed source of funding for highway construction and safety expenditures. As noted in the discussion of current Federal revenue sources above, there are exemptions from some Federal taxes that are credited to the HTF. Some exemptions are a direct result of the underlying reason for the HTF, and some exemptions are intended to encourage broader social goals. Some exemptions, however, result in certain vehicles receiving special treatment that is counter to fairness and equity goals.

If highway cost allocation equity were the most important societal goal, highway users would pay their share of the annual fees needed to maintain and expand the highway system. The shares would be related to the demands that the individual vehicle placed on the highway infrastructure. Users with identical vehicles that use the public highways equally would pay the same amount of highway user taxes. There would be no exemptions or special treatment of one user or one vehicle over another. However, a variety of exemptions exists.

Table IV-3. Current Federal Tax Rate1

Current Tax

Tax Rate Under Current Law2

Fuel Gasoline 18.3 cents per gallon
Diesel 24.3 cents per gallon
Gasohol: 10 percent Gasohol made with Ethanol 12.9 cents per gallon
LPG (Propane) 18.3 cents per gallon
CNG 4.3 cents per gallon
LNG 18.3 cents per gallon
Ethanol 11.3 cents per gallon
Methanol 11.3 cents per gallon
Vehicle Excise Tax Heavy Trucks >26,000 pounds (see description in text) 12 percent of retail sales for new vehicles (trucks, tractors, and trailers)
Tire Tax Over 40 to 70 pounds 15 cents per pound in excess of 40 pounds
Over 70 to 90 pounds $4.50 plus 30 cents per pound over 70 pounds
Over 90 pounds $10.50 plus 50 cents per pound over 90 pounds
HVUT Annual tax on Motor Vehicle registered 55,000 pounds gross weight or more. $100 plus $22 per 1,000 pounds over 55,000 with an annual cap of $550
  1. From Highway Statistics Table FE-21: Federal Excise Taxes on Highway Motor Fuel.
  2. Taxes are distributed among HTF Highway Account, HTF, MTA, LUST fund, General Fund for Deficit Reduction, and General Fund Not Specified.

The simplest type of exemption is for non-highway use of a vehicle. Since the HTF is a user-financed revenue system, the ideal of fairness would lead to the non-user being excluded from paying highway taxes. For example, agricultural and construction vehicles are mainly used off the highway, and such use should not require the payment of highway user taxes. Typically, gasoline is available only with the highway user taxes included in the purchase price. Therefore, exempt users can apply for a tax credit or a refund of tax paid on gasoline which is used off the highway. Further, highway use items that are exported are not subject to the Federal highway user taxes.

Typically, a user is exempt from one or more of the highway user excise taxes due to the characteristics of the operator of the vehicle rather than the type of vehicle itself. Also, if an exempt user pays a highway user excise tax, for example in the purchase of fuel, then that user can apply for a refund of the tax paid or obtain credit for the tax paid against other tax liabilities. Such credits may be applied against any tax owed to the Federal Government, thus the HTF is debited for both credits and refunds of taxes paid by exempt users.

The broadest category of current exemptions is for minimal highway usage. The HVUT is assessed on an annual basis and has an exclusion for those vehicles which use the public highways less than a minimal amount during the year. Since the HVUT does not vary with increasing mileage, those vehicles that rarely use the public highways are relieved from payment of the HVUT.

Those exemptions from highway user taxes that are extended to certain classes of vehicles for broader social goals include bus exemptions. For example, most buses that were not already exempt for other reasons such as being operated by a government agency were exempted from nearly all highway user excise taxes by the EPACT to encourage energy efficiency and less dependence on foreign petroleum.

The value of exemptions are difficult to measure. The amount of revenue not collected due to the various exemptions cannot be known exactly. Estimates of the magnitude of the exemptions shown in the accompanying table are based on the best information available gathered from a variety of sources.

Categories of Exempt Users

State and local governments are exempt from the Federal highway user taxes. In 1994, the exemption for State and local governments is estimated to be about $750 million. This is expected to grow to $1 billion by 2000.

As mentioned above, buses are exempt from most highway user taxes for broader social goals. A large number of buses are owned and operated by State and local governments, including a significant percentage of school buses and transit buses. The exemption for State and local governments just discussed naturally applies to the buses owned and operated by such entities. Most transit agencies are quasi-governmental in their structure and would likely qualify under most interpretations of the State and local exemption. The Energy Tax Act of 1978 removed the highway user taxes on privately owned intercity, local, and school buses. The rationale advanced for the special treatment of this class of vehicles is that buses are more energy efficient than automobiles. Encouraging the use of buses instead of automobiles is intended to decrease the national reliance on imported petroleum. Subsequent changes in the law have resulted in intercity buses paying 3 cents per gallon on the motor fuel they consume. The bus exemption results in the HTF not collecting about $100 million annually that would otherwise be due from privately owned buses.

Motor Fuel

The general exemptions available to State and local governments and to nearly all buses apply to all motor fuel taxes. As was mentioned in the discussion of the exemption afforded buses, intercity buses are exempt from all highway user taxes except for 3 cents per gallon of the highway user excise tax on motor fuel. As referred to in the example above, off highway use of motor fuel is generally tax exempt. For agricultural and construction vehicles most of the use of those vehicles is not on the public highways; therefore the fuel consumed during such non-highway operation is not subject to the Federal highway user excise taxes. Similarly, the Department of Defense (DoD) uses most of its vehicles off the highway, and generally its motor fuel usage is not liable for the Federal highway user excise taxes. The Federal Government, including DoD, pays taxes on the highway use of motor fuel.

Recreational boating for fishing and other uses is also off-highway use of motor fuel, but motor fuel used in these vehicles is not exempt. The tax collected on the sale of such motor fuel is transferred to other funds for the improvement of boating facilities and for boating safety. Currently, more than $200 million is transferred to boating and recreational safety funds annually. Similarly, provision is made in the law for the transfer of the tax collected from the use of motor fuel in off-road recreational vehicles to the Recreational Trails Trust Fund for improvement of recreational trails and backwoods areas. Commercial fishing vehicles are not required to pay the Federal highway users motor fuel taxes.

Generally, the agricultural and construction usage and DoD usage of nontaxable motor fuel is predominantly diesel fuel. There are provisions in the law for purchase of diesel fuel without the Federal highway user taxes being included in the purchase price, and the potential for evasion of Federal highway user taxes exists. For example, petroleum products such as kerosene or jet fuel can be readily blended into diesel fuel without payment of the required taxes. Therefore, there is a nationwide fuel tax compliance project that among other things led to the requirement to dye diesel fuel on which the Federal, and in some cases State, highway user taxes had not been paid. Vehicle operators who are caught using dyed fuel for taxable purposes are subject to penalties and fines.

As is clear from the discussion of the Federal excise taxes on gasohol, gasohol receives an exemption from part of the gasoline excise tax. The EPACT removed all Federal highway user taxes from mixtures containing at least 10 percent alcohol. The current exemption is 5.4 cents per gallon for gasohol containing 10 percent alcohol. The EPACT made the gasohol exemption available at reduced rates for certain reduced concentrations of alcohol which correspond to Federally defined levels of oxygen in gasoline. The EPACT effectively pro rated the gasohol exemption for reduced levels of alcohol in the newly defined types of gasohol. The EPACT allows gasohol to be used to meet the Federal requirements for specified levels of oxygen in gasoline mandated in certain areas that fail to meet air quality standards.

The current gasohol exemption allows the blender to claim 54 cents per gallon of ethanol blended into gasoline, if blended at any of the three defined levels. However, when at least 10 percent of the mixture is alcohol (ethanol or any other alcohol) and any amount of ethanol is blended, the HTF receives 0.6 cents per gallon less than it otherwise would receive. So, for 10 percent ethanol blends, the HTF receives 6 cents per gallon less than it would have received from a gallon of gasoline. The entire revenue loss due to the gasohol exemption is absorbed by the Highway Account; the MTA receives the same amount from each gallon of fuel taxed. In FY 1994, the gasohol exemption cost the Highway Account of the HTF over $680 million.

Other Taxes

The general exemptions available to State and local governments and to buses apply to all other highway user taxes. There are some specialized exemptions for the other highway user taxes.

The excise tax on new heavy truck sales only applies to vehicles that weigh more than 33,000 pounds GVW or combination vehicles that weigh more than 26,000 pounds GVW. In effect this exempts trucks at 33,000 pounds and less and combination vehicles at 26,000 pounds and less. The exemption for lighter vehicles is because the heaviest vehicles require a disproportionate investment in the construction and reconstruction of the public highways. The heaviest vehicles are a small part of the traffic stream but require more investment in stronger pavements and bridges, therefore they are assessed additional taxes, such as the Federal excise tax on heavier truck and trailer sales.

Camper bodies and mobile homes bodies are not subject to the Federal excise tax on truck sales. House trailers are also exempt. These body types are exempt because they do not use the public highways extensively and the value of the body is unrelated to its weight or highway usage. The vehicles of this type are generally not on the public highways very much, but tend to be stationary even though they are built on a chassis that could be used for other types of vehicles. Equipment or vehicle bodies used to process, prepare, haul, spread, or load or unload feed, seed or fertilizer are exempt from the Federal excise tax on new truck sales. The value of this equipment is unrelated to its highway usage, but this type of equipment or truck body typically is not used on the public highways. Similarly, equipment used to process or prepare concrete is excluded from the computation of the Federal excise tax on the new sale of concrete mixer trucks. The truck itself is taxed but the value of the concrete mixer equipment is exempt. Ambulances, hearses and combination ambulance-hearses are exempt. Trailers designed to be used also as a railroad car are exempt. Trash containers that are not permanently mounted on a vehicle and that are not designed for other transportation uses are exempt. These exemptions generally exclude equipment that is not intended for highway use. These specific exemptions tend to result in taxing only the truck portion of a specialized vehicle.

The Federal HVUT is only assessed on vehicles that operate at 55,000 pounds GVW or greater. Again, this is an implicit exemption for lighter vehicles. The same rationale applies in that the heaviest vehicles require additional investment in the highway infrastructure therefore, they should pay additional taxes. For the HVUT there are some other exemptions. Vehicles that travel less than 5,000 miles annually on the public highways are exempt. Farm vehicles that travel less than 7,500 miles annually on the public highway are exempt. For vehicles that are used exclusively to transport harvested forest materials, there is a 25 percent reduction in the HVUT. Similarly, there is a 25 percent reduction in the HVUT for vehicles registered in Canada or Mexico. For the low mileage vehicles, the exemption recognizes that the HVUT is a flat fee that is invariant with usage. That is, the least used vehicle pays as much as the most heavily used vehicle while the heavily used vehicle will cause more wear on the highway than other vehicles. Therefore, those vehicles that use the public highways only rarely are given relief from the HVUT. The partial exemption for logging trucks recognizes that the back haul for those vehicles is usually empty. Similarly, the partial exemption for foreign registered vehicles recognizes that a significant part of mileage for such vehicles is occurring outside the United States. Finally, the law allows the U.S. Secretary of the Treasury to waive the collection of the HVUT from Federal Government vehicle operators, which has been done. The total HTF revenue foregone as a result of the HVUT exemptions is about $40 million annually.

Table IV-4. Estimated Value of Federal HTF Exemptions for 1994 and 2000 ($ Millions)

Exemptions

1994

2000

State, County, Municipal Exemption

$758.5

$1,008.5

Bus Exemption

94.9

120.5

Gasohol Exemption*

684.3

745.1

HVUT Exemptions for:    
1. Limited Traveling Vehicles less than 5,000 miles annually

32.6

43.9

2. Agricultural Vehicles (traveling less than 7,500 miles annually)

2.5

3.4

3. Logging Trucks (25 percent exemption)

2.3

3.1

4. Federal Vehicles

1.0

1.3

Total

$1,576.1

$1,925.8

* Gasohol historical figure based on Income Statement for the HTF, forecasts based on FY 1997 budget documents. NOTES: Exemptions based on extension of current law and assumed to grow at same rate as corresponding tax in FY 1997 budget.

The State and local government exemption and the bus exemption are the only explicit exemptions from the Federal excise taxes on highway tires. The tax applies to all highway tires that weigh over 40 pounds, therefore there is an implicit exemption for lighter tires. Again this exemption relates to the need for stronger pavements and bridges for the heavier vehicles. The heavier vehicles also use the heavier tires, so the Federal tax applied only to heavier tires attempts to target the collection of revenue from the heavier vehicles. Table IV-4 provides estimates of HTF exemptions, as discussed in this section of the report. Per the table, exemptions for State/local governments and gasohol are estimated to total $1.7 billion in 2000 and represent the vast majority of the exemptions from Federal highway user fees.

Current and Forecast Federal Highway User Revenues

Most highway user revenues are paid to the IRS by the sellers of a taxable product, and are collected from users by the sellers. Thus it is difficult to attribute revenues by various vehicle types. Types of taxes have changed over time, with the last major tax scheme changes in 1982. Rates have changed several times since 1982, but the structures of taxes have remained the same. Current Federal highway user taxes are: fuel tax, vehicle excise tax, tire tax, and HVUT. A highway revenue forecasting model (HRFM), developed for this report, was used to forecast highway revenues by revenue option (tax type) and attribute these revenues to particular vehicle classes and weight groups.

Fuel tax revenues for each vehicle class are estimated based on three variables: miles per gallon (MPG), VMT, and operating weight. As a result, the revenue forecasts used in the 1997 Federal HCAS within a vehicle class are a function of operating weight. The MPG estimates were developed for each vehicle class, based on a typical engine type, transmission and vehicle performance characteristics— reflecting the impact of higher gross weight, and are differentiated into 5,000 pound interval operating weight groups and vehicle fuel types. Key input data to the development of these MPG estimates came from the TIUS, several publications by the EPA for new vehicle fuel efficiencies, and information from U.S. Department of Energy (DOE), ATA, the U.S. DOT, and other sources. Given the number of different sources, engineering judgment was necessary at times to resolve inconsistencies between the data and to weigh the relative importance of each factor to MPG. The HRFM estimates the gallons of fuel consumed by multiplying MPG times VMT for each vehicle class and operating weight group, and the revenues are then a function of tax rate and gallons of fuel consumed.

Vehicle excise taxes for each vehicle class are difficult to estimate because revenues are based on the retail price of new vehicle sales. Thus, a number of factors influence revenues including size of the truck/tractor, the body type, and any special equipment added on to a new vehicle. The HRFM contains price data for up to six different body types within each vehicle class: flatbed, tank-trailer, conventional van, insulated-refrigerated van, dump-trailer, and hopper. Stock is estimated for each vehicle class as well as the number of new sales for each year. Sources for price and stock data include: the TIUS, State registrations as reported in FHWA’s Highway Statistics, various industry sources, and R. L. Polk. The HRFM estimates annual retail sales by multiplying the sales price times the number of new vehicle sales by body type, and revenues are based on a percentage of total retail sales. It is important to note that this tax applies only to trucks which have a manufacturers’ gross vehicle rating in excess of 33,000 pounds and this is accommodated by the HRFM.

Tire tax revenues are based on tire consumption and weight of the tire. The HRFM contains data on tire weights and typical tire lives by vehicle class, based on a number of industry sources including commercial vehicle tire suppliers. Tire life is forecasted to decrease as a function of gross vehicle operating weight and miles travel. The number of tires consumed is calculated by dividing VMT by tire life, for each vehicle class/operating weight cell, multiplied by the number of tires on the vehicle. The HRFM computes the appropriate tax, based on the weight of the tire, for each of these cells. Tires which weigh less than 40 pounds are not subject to this tax.

The HVUT revenues are based on the total number of vehicles that are registered at 55,000 pounds or higher. The stock components of the HRFM provide the number of vehicles in each vehicle class/ registered weight group. As mentioned before, the stock model incorporates data from Highway Statistics, R. L. Polk, TIUS, and other sources. These vehicle stock for each weight group are multiplied by the appropriate tax rate, subject to the annual cap of $550, resulting in total heavy vehicle use fee revenues.

Figure IV-1 highlights the distribution of Federal HURs in 2000. The auto and pickups account for about 65 percent of the total revenues generated, as compared to 92 percent of total VMT. As for freight vehicles, single units and combination trucks account for 10 percent and 25 percent of revenue, respectively, as compared to 3 percent and 4 percent of total VMT in 2000. This revenue/mile is noticeably higher for trucks as compared to passenger vehicles. Figure IV-2 shows the distribution of total taxes collected by tax type in 2000. Motor fuel dominates with 86 percent of total tax collected, followed by vehicle excise, HVUT, and tire.

Figure IV-1. 2000 Distribution of Federal Highway Revenues by Broad Vehicle Classes Figure IV-2. 2000 Distribution of Federal Highway User Tax Categories

Table IV-5 presents the current revenues for each user fee for base year period (1994) by tax type as well as the shares for each of the 20 vehicle classes. Autos pay only fuel taxes and contribute about 42 percent of the total revenue. Trucks pay all of the tax categories with fuel followed by vehicle excise taxes being the largest revenue producers. Single unit 2-axle truck and combination 5-axle semitrailer with tandem axles pay the highest total taxes with 7 percent and 18 percent, respectively, of total taxes. Note that the second column, Fuel Tax Including Deficit Reduction, includes the extra 4.3 cents/gallon tax.

Table IV-5. Federal Highway User Fee Payments by Vehicle Class — 1994 ($ Millions)

Vehicle Class

Fuel Tax

Fuel Tax Including Deficit Reduction

HVUT

Tire Tax

Vehicle Excise Tax

Total

Shares Percent

Shares (Percent) including Deficit Reduction

AUTO

$8,785

$14,266

$0

$0

$0

$8,785

42.18

45.52

LT4

4,630

7,487

0

0

0

4,630

22.23

23.89

SU2

1,482

2,238

1

24

0

1,507

7.23

7.22

SU3

276

388

54

31

0

361

1.73

1.51

SU4+

111

155

30

23

38

203

0.97

0.79

CS3

63

89

4

4

0

71

0.34

0.31

CS4

230

322

47

18

0

295

1.42

1.23

CS5T

2,284

3,185

376

168

1,011

3,840

18.43

15.13

CS5S

81

113

13

6

36

136

0.65

0.54

CS6

163

228

37

25

101

326

1.57

1.25

CS7+

17

24

4

2

11

34

0.17

0.13

CT3&4

27

40

2

3

71

104

0.50

0.37

CT5

50

70

18

6

44

118

0.57

0.44

CT6+

14

20

4

2

10

31

0.15

0.12

DS5

137

191

20

11

69

237

1.14

0.93

DS6

20

28

3

2

11

36

0.17

0.14

DS7

19

27

3

2

15

39

0.19

0.15

DS8+

24

34

4

3

20

50

0.24

0.19

TPL

4

5

0

0

3

7

0.03

0.03

BUS

18

37

0

1

0

19

0.09

0.12

TOTAL

$18,436

$28,945

$620

$331

$1,441

$20,828

100.0

100.0

NOTES: Sums may not total due to rounding. See Chapter I for vehicle definitions.

Table IV-6 highlights the Federal highway user fee revenue estimates for the Year 2000, using the existing tax rates. Autos, as a vehicle class, contribute about 43 percent of the total Federal user fee revenue, while 5-axle semitrailer with tandem axles generate about 19 percent of the revenue.

State and Local Revenues

State and local taxes that apply to both highway and non-highway user such as sales taxes, are not considered HURs because they are not exclusively levied on motor vehicle use. The principal State and local HURs are motor fuel taxes, motor vehicle registration fees, drivers’ license fees, WDT, and ad valorem taxes applying principally to motor vehicles.

State governments collect the largest shares of HURs through motor fuel taxes and motor vehicle registration fees. Each State has its own motor fuel and motor vehicle tax structure established by the State legislature. Local governments collect only a small amount or revenues from highway user taxes that are principally motor fuel taxes and motor vehicle registration fees. Table IV-7 highlights the State and local revenue estimates for 1994 and 2000.

Highway Finance Data Sources

The principal source of financial data used in this study is the FHWA’s Highway Statistics. The FHWA publishes data annually in Highway Statistics highway finance tables. The FHWA obtains its data based on reports submitted from State highway agencies and from other State agencies responsible for highway functions such as tax and revenue offices. The State reports are submitted annually and follow the reporting guide distributed by FHWA. Local government finance information is based on reports coordinated through State highway agencies and are submitted on a biennial basis and estimated by FHWA for years not reported.

Table IV-6 Federal Highway User Fee Payments by Vehicle Class—2000 ($ Millions)

Vehicle Class

Fuel Tax

HVUT

Tire Tax

Vehicle Excise Tax

Total

Shares (Percent)

AUTO

$11,576

$0

$0

$0

$11,576

42.60

LT4

5,811

0

0

0

5,811

21.39

SU2

1,879

1

32

0

1,912

7.04

SU3

337

47

41

0

425

1.56

SU4+

124

43

30

63

260

0.96

CS3

77

5

5

0

87

0.32

CS4

278

65

24

0

367

1.35

CS5T

2,753

527

223

1,647

5,150

18.95

CS5S

98

19

8

58

183

0.67

CS6

220

52

33

164

470

1.73

CS7+

21

5

3

19

47

0.17

CT3&4

34

3

4

116

158

0.58

CT5

60

25

8

72

165

0.61

CT6+

17

6

3

17

43

0.16

DS5

165

28

14

113

320

1.18

DS6

24

4

2

18

48

0.18

DS7

23

4

2

24

54

0.20

DS8+

28

5

3

32

68

0.25

TPL

5

1

0

5

10

0.04

BUS

19

0

1

0

20

0.07

TOTAL

$23,547

$841

$439

$2,347

$27,174

100.0

NOTES: Sums may not total due to rounding. See Chapter I for vehicle definitions.

 

Table IV-7. State and Local HURs for 1994 and 2000 ($ Millions)

HURs

1994

2000

Growth Rate (Percent)

State Revenues      
Motor Fuel Taxes      

Gasoline

21,309

30,915

6.40

Diesel

4,395

7,159

8.47

LPG

237

247

0.69

Total Motor Fuel Taxes

25,941

38,321

6.72

Motor Vehicle Taxes      

Registration Fees

14,945

21,917

6.60

Drivers’ License Fees

823

1,109

5.10

Title Fees

859

1,301

7.33

Fines and Penalties

174

180

0.57

Other

2,959

5,089

9.30

Total Motor Vehicle Taxes

19,760

29,596

6.97

Third Structure Taxes

578

734

4.06

Tolls

3,612

5,177

6.18

Total State Revenues

49,891

73,831

6.75

Local Revenues      

Motor Fuel Taxes

661

872

4.74

Motor Vehicle Taxes

802

1,157

6.30

Tolls

1,067

1,484

5.66

Total Local Revenues

2,530

3,513

5.63

Total

52,421

77,334

6.69

Comparison of Highway User Revenue Data

Figure IV-3 shows the trend in State HURs by revenue type from 1980 to 1994 as reported by the FHWA. State HURs have increased consistently through the 1980s and 1990s. The most significant growth occurred between 1985 and 1992 with annual growth rates averaging 10 percent. The annual growth rate for the entire period was 8.7 percent. In 1994, motor fuel taxes represented over 50 percent of total State HURs, with motor vehicle taxes accounting for 40 percent, and toll revenues less than 8 percent.

Local governments collect only a small portion revenues used for highways through highway user taxes. As part of total HUR, local revenues represent less than 4 percent. Approximately one-quarter of local HUR are from motor fuel taxes, one-third are motor vehicle registration fees and operators’ license fees, and about 40 percent are tolls. Figure IV-4 shows the trend in local government HUR in current dollars as reported by FHWA.

Local HURs have increased significantly at close to 20 percent per year during the last 14 years. The FHWA historical information shows a significant decrease in local toll revenues during the late 1980s which might be caused by reporting error rather than a true decrease in revenues because there is no apparent explanation for the dramatic decrease in toll revenues.

Trends in Motor Fuel Tax Rates

The majority of motor fuel tax rates are fixed rates which are adjusted only when an increase is approved by a legislative body. A few States have variable rates that are indexed to a change in prices. In general, State tax rates have been increasing over the last 15 years, but because rates are adjusted relatively infrequently, there are periods when the average real tax rate has actually declined.

In order to examine trends in motor fuel tax rates, effective tax rates are estimated for all fuel types combined. The effective rate is calculated by dividing the net revenues collected by the gallons of fuel taxed. Using an effective tax rate avoids problems with rate changes during a year and with exemptions for specific fuel use. Figure IV-5 shows the changes in the effective motor fuel tax rate at the Federal and State levels. State motor fuel taxes have increased every year but have begun to level off during the early 1990s. The Federal motor fuel tax rates increased sharply in the early 1980s and again in the late 1980s but declined slightly during the mid 1980s. The average annual growth of motor fuel tax rates was 5.9 percent at the State level and 11.1 percent at the Federal level during the 14 year period.

Trends in Motor Vehicle Fees for State and Local Governments

The majority of motor vehicle fees are collected by States with a small portion raised by local governments. In 1994, over $20 billion was collected in motor vehicle fees, which included registration fees, operator licenses, title fees, fines and penalties, WDTs, and special permits. Total revenues from motor vehicle taxes have been increasing fairly consistently over the last 15 year; however, part of this is attributed to the increase in the number of registered vehicles. In order to the examine the trends in motor vehicle fees each vehicle is paying, trend analysis has been done on a per vehicle basis.

Figure IV-6 presents the changes in average annual motor vehicle fees per registered vehicle for State and local governments. State motor vehicle fees are reported values from Highway Statistics. Local motor vehicle revenues are based on FHWA’s reported local HURs, but motor vehicle taxes are separated from motor fuel taxes using the distribution reported by the Bureau of the Census. The figure shows that the average motor vehicle in 1994 paid approximately $100 in State motor vehicle fees and only $4 in local fees. The fastest growth in fees occurred from 1985 to 1988 with annual growth averaging 17 percent. Over the entire period, State motor vehicle fees increased 8.5 percent annually and local fees increased 11.5 percent.

Highway User Revenues Collected By All Levels of Government

The trend in total HUR collected by Federal, State, and local governments is presented in Figure IV-7. For FY 1993, States collected 66 percent of all HURs, the Federal Government 31 percent, and local governments only 3 percent. However, local governments had the largest growth in revenues at 19.8 percent per year, followed by States at 10.5, and the Federal Government at 8.7 percent annually.

Revenues Per Vehicle Miles of Travel and Per Registered Vehicle

One might expect that HURs would increase as the level of transportation activity increases. Generally, revenues increase as motor fuel is consumed and more vehicles are registered. By analyzing revenues per VMT and per registered vehicle, the increase is attributed to more demand for transportation. Figure IV-8 shows the trend in HURs per 10,000 VMT and per registered vehicle from 1980 to 1994. The revenues are for all levels of government combined, and the VMT and registered vehicle data are from FHWA’s Highway Statistics.

The revenue trend shows that HURs per VMT and per registered vehicle more than doubled from 1980 to 1994 in current dollars. The HURS per 10,000 VMT increased from $145 in 1980 to $329 while revenues per registered vehicle increased from $137 to $384, respectively. This indicates that highway users are paying twice as much for transportation services than during the early 1980s in current dollars.

Table IV-8. Total 1994 HURs for All Levels of Government ($ Millions)

Federal1

State2

Local

Total

Motor Fuel

$18,436

$25,941

$661

$45,038

Registration and Title Fees

$620

$15,804

$802

$17,226

WDT

N/A

$578

N/A

$578

Vehicle Excise Tax

$1,441

N/A

N/A

$1,441

Tire Tax

$331

N/A

N/A

$331

Drivers’ License Fees

N/A

$823

N/A

$823

Fines and Penalties

N/A

$174

N/A

$174

Tolls

N/A

$3,612

$1,067

$4,679

Other Fees

N/A

$2,959

N/A

$2,959

Total

$20,828

$49,891

$2,529

$73,248

N/A: Not Applicable
1 Federal revenues do not include deficit reduction and LUST fund revenues.
2 All forecasts are based on analysis of trends as described in the text.

Highway User Revenues Collected By All Levels of Government

Total HUR collected by Federal, State, and local governments is presented in Tables IV-8 and IV-9 for 1994 and 2000. These tables provide the actual amounts of HURs for all three levels of government for 1994 and a forecast for 2000 using existing tax rates at the Federal level.

Comparison of User Payments by Vehicle Class for all Levels of Government

Evaluating relationships between Federal user fees and Federal highway cost responsibility is essential for evaluating the equity of the Federal highway user fee structure, but comparisons of total user fee payments and total highway cost responsibility for all levels of government are important in evaluating overall subsidies to various classes of vehicles that might give them a competitive advantage over other modes of transportation, and in evaluating other effects of national highway financing programs. State and local governments collect 62 percent of total HURs and expend 76 percent of total expenditures when all revenues and expenditures are included. These percentages are much higher (72 percent and 82 percent respectively) if Federal deficit reduction revenues are removed and expenditures by spending agency are considered.

Table IV-10 shows total 1994 HURs for all levels of government by type of fee. This table provides an elaboration of the revenue side of the summary balance sheet shown in Table 1 in the Federal HCAS Summary Report, breaking down revenues at each level of government into sources by the three broad categories that have traditionally been used to classify HURs:

Table IV-9. Total 2000 HURs for All Levels of Government ($ Millions)
 

Federal1

State2

Local

Total

Motor Fuel

$23,547

$38,321

$872

$62,740

Registration and Title Fees

$841

$23,219

$1,157

$25,217

WDTs

N/A

$734

N/A

$734

Vehicle Excise Tax

$2,347

N/A

N/A

$2,347

Tire Tax

$439

N/A

N/A

$439

Drivers’ License Fees

N/A

$1,109

N/A

$1,109

Fines and Penalties

N/A

$180

N/A

$180

Tolls

N/A

$5,177

$1,484

$6,661

Other Fees

N/A

$5,089

N/A

$5,089

Total

$27,174

$73,829

$3,513

$104,516

N/A: Not Applicable
1 Federal revenues do not include deficit reduction and LUST fund revenues.
2 All forecasts are based on analysis of trends as described in the text.

Table IV-10. 1994 HURs by Type for All Levels of Government ($ Billions)

Revenue Categories

Federal1

State

Local

All Levels

First Structure (Fixed Fees)

Registration

Title Fees

Ad Valorem

Drivers’ License

Heavy Vehicle Use

Other or Miscellaneous

Subtotal

---

---

---

---

0.6

1.4

2.1

14.9

.9

3.2

0.8

---

---

19.8

---

---

---

---

---

0.8

0.8

14.9

.9

3.2

0.8

0.6

2.2

22.7

Second Structure (Fuel Taxes)

Gasoline

Diesel

Gasohol

Other

Subtotal

13.9

3.5

0.7

0.4

18.4

19.6

4.4

1.7

0.2

25.9

0.5

0.2

--

--

0.7

34.0

8.1

2.4

0.6

45.0

Third Structure (Use Related Fees)

Weight-Distance

Tire

Tolls and Other

Subtotal

---

0.3

---

0.3

0.6

---

3.6

4.2

---

---

1.1

1.1

0.6

0.3

4.7

5.6

Total

20.8

49.9

2.5

73.2

1 Excludes Federal fuel taxes of $10.5 billion earmarked for deficit reduction and the LUST fund.

The Federal Government has the lowest proportion of its tax structure in both first and third structure user taxes (10 percent and 1 percent, respectively), of all the three levels of government, and therefore has the highest proportion (88 percent) in second structure taxes. Relatively speaking, the Federal Government has a tax structure that responds well to the amount of highway travel, but does not respond well to the variations in costs per vehicle mile that can be achieved with third structure taxes. However, the Federal fuel tax structure includes a higher diesel fuel tax rate (a "diesel differential" of 6 cents) — a feature that significantly improves the Federal tax structure in relation to cost responsibility.

The States vary greatly in their relative mixes of the three types of taxes. As a whole, States rely more on first structure taxes (39 percent) than either of the other two levels of government. However, a few States have shares of first structure taxes about as low as at the Federal level and have substantial shares of their taxes in third structure taxes. None of the States has a higher proportion of its tax structure in second structure taxes than the Federal Government, although a few come close (70 to 80 percent range). Also, only a few of the States have substantially higher diesel fuel tax rates like the Federal diesel differential of 6 cents.

Although local governments as a whole recover only about 10 percent of their costs from highway users (see Table 1, Federal Highway Cost Allocation Study Summary Report), they do collect the highest share from third structure taxes (about 45 percent), almost all in the form of tolls. Tolls have the potential for reflecting cost responsibility quite well depending on the toll structure and the extensiveness of toll facilities.

Table IV-11. 2000 Highway User Fee Payments by Vehicle Class for All Levels of Government ($ Millions)

Vehicle Class/Registered

Federal

State

Local

Total

Autos

$11,576

$34,524

$1,164

$47,264

Pickups and Vans

$5,812

$16,263

$479

$22,554

Buses

$20

$311

$6

$337

All Passenger Vehicles

$17,408

$51,098

$1,649

$70,155

Single Unit Trucks        
<25,000 pounds

$1,500

$3,831

$84

$5,415

25,001 - 50,000 pounds

$611

$1,802

$58

$2,471

>50,001 pounds

$487

$924

$31

$1,442

All Single Unit Trucks

$2,598

$6,558

$173

$9,329

Combination Trucks        
<50,000 pounds

$306

$560

$15

$881

50,001 - 70,000 pounds

$504

$902

$22

$1,427

70,001 - 75,000 pounds

$370

$548

$14

$932

75,001 - 80,000 pounds

$5,521

$7,651

$145

$13,317

>80,000 pounds

$468

$1,156

$12

$1,636

All Combinations

$7,169

$10,818

$208

$18,195

All Trucks

$9,766

$17,376

$380

$27,522

All Vehicles

$27,174

$68,474

$2,029

$97,677

Table IV-11 shows estimates of highway user payments by vehicle class for all levels of government for the Year 2000. These user payments include all the revenue sources shown for each level of government in the preceding table. The Federal tax structure in general tends to increase user payments more rapidly with the size and weight of vehicle classes than the State and local tax structures. Federal user fees are 25 percent of total national user fees for passenger vehicles, 28 percent for single unit trucks, and 39 percent for combinations. This progression also occurs to a significant extent as registered weight increases, with one important exception — the heaviest class of combination trucks (>80,000 pounds) pays a smaller percentage of its total national user fees at the Federal level than any of the lighter classes of combinations. The current Federal tax structure does not increase with weight above 80,000 pounds as much as occurs, on average, at the State level.

Federal Highway Taxes Paid by Different Vehicle Classes

The Federal highway user tax scheme includes taxes that vary with mileage, operating weight, vehicle purchase price, declared weight, and others. Individually, these taxes vary noticeably by truck type, mileage, and weight. However, collectively, the taxes do not vary as much and do a poor job reflecting costs at the heavier weights, as shown in Chapter VI. Figure IV-9 illustrates how the individual taxes vary by weight for a typical truck type — tractor-semitrailer combination with 5-axles, 2 rear tandem axles.

Fuel Taxes

The motor fuel taxes are based on a cent per gallon. Such a tax would vary by miles traveled by the vehicle and to a lesser degree, weight of the vehicle. Other vehicle parameters, such as engine size, fuel type, transmission design, and truck operations (geographic and driver skills), all influence vehicle fuel economy, thus, fuel consumption and fuel tax. The 1997 Federal HCAS HRFM calculates fuel tax revenue based on VMT operating weight gallons per mile (GPM). The GPMs are sensitive to vehicle weight. Figure IV-9 highlights fuel taxes by weight and mileage for selected vehicle types. In general, fuel taxes increase with mileage and to a lesser degree, weight.

Truck and Trailer Excise Tax

The truck and trailer excise tax is levied on new truck purchases above 33,000 pounds manufacturer weight class. For each vehicle class, HRFM calculates sales of up to six types of body styles are priced and multiplied by the excise tax rate to result in revenues. Different body types, as proportions of an entire vehicle class, all for different sizes, types, and special equipment. Figure IV-9 provides revenue (cent/mile) data of the heavy vehicle excise tax for selected truck types. These data reflect average number of annual sales and average value of the truck equipment. However, special equipment such as tank trailers, can cost as much as 4- to 5-fold that of a normal dry van trailer. Therefore, the excise tax is not sensitive to weight and mileage for direct tax purposes. However, operational use of the trailer will influence its replacement cycle.

Tire Tax

The Federal tire tax is assessed on purchase of tires weighing 40 pounds or greater. The HRFM calculates tire tax revenues for each vehicle class and weight group by: estimating tire life VMT, multiplied by number of tires/axle configuration to yield the revenue. The sum of all vehicle classes and weight groups results in total tire tax revenue. Figure IV-9 provides information on tire tax by weight groups for selected vehicle types and, in general, this tax is not sensitive to weight and has some sensitivity to mileage — replacement of the tires.

Heavy Vehicle Use Tax

The Federal HVUT is a declared weight-based tax with a cap of $550 per year. The HRFM calculates vehicle use fee revenue by using truck stock by registered weight multiplied by tax rate by weight to produce total revenue. Figure IV-9 illustrates the smooth slope and plateau of the HVUT given the nature of the cap for selected trucks and the HVUT is sensitive to weight, until 75,000 pounds GVW, but not mileage sensitive.

Back to the Table of Contentsright.gif (1393 bytes)