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New vehicles could lead to tax policy changes

The push for more fuel-efficient vehicles and alternative-fuel vehicles has led to concern that gasoline tax collections could drop along with funding for roads and bridges.
by Adam Wilmoth Modified: April 4, 2013 at 7:48 pm •  Published: April 5, 2013

As the country moves toward more fuel-efficient cars and vehicles powered by alternative fuels, the trend eventually could require changes in the country's tax policies, industry observers say.

The Obama Administration last summer unveiled strict Corporate Average Fuel Economy, or CAFE standards, which would require each auto manufacturer's fleet of new vehicles to average 54.5 miles per gallon in 2025, up from 28.6 miles per gallon in 2011.

At the same time, industry and public policy leaders are pushing the development of natural gas and electric vehicles.

Most of the efforts are led by a desire to reduce dependence on foreign oil or to cut greenhouse emissions. A side effect is that the effort could lead to reduced gasoline tax collections, which are mostly assessed per gallon and are used primarily to fund road and bridge projects throughout the country.

“The question not being asked is: How are they going to pay to be on the road?” said Bobby Stem, executive director of the Association of Oklahoma General Contractors, a lobbying group for companies that build roads and bridges.

Gov. Mary Fallin has led an effort that now includes 22 states to encourage automakers to develop more natural gas vehicles.

Oklahoma Energy Secretary Mike Ming said the question of road taxes will need to be addressed at some point, but that it's not much of an issue today.

“The reality is that it is going to take some time just to get enough vehicles built to make a difference,” Ming said. “When that happens, I think public policymakers will say, ‘We addressed imports and national security and balance of trade. Now we need to address how we fund roads and bridges.'”

About 93 percent of the country's vehicles run on traditional gasoline and diesel. Transportation fuels represent 71 percent of the country's total oil usage.

Compressed natural gas carries the same 18.4 cents per gallon equivalent federal sales tax as gasoline.

In Oklahoma, an additional 17 cents per gallon state tax is assessed per gallon of gasoline, while the state tax on CNG is 5 cents a gallon.

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by Adam Wilmoth
Energy Editor
Adam Wilmoth returned to The Oklahoman as energy editor in 2012 after working for four years in public relations. He previously spent seven years as a business reporter at The Oklahoman, including five years covering the state's energy sector....
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