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Opinion

Opinion | JEFF JACOBY

Tax the roads, not the fuel

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For decades, gasoline taxes have been the largest source of funds for building and fixing America’s highways. What happens if those funds dry up?

Gasoline sales have been trending downward in recent years, thanks in part to more fuel-efficient cars, which travel farther and farther between fill-ups. That trend is sure to continue. Federal fuel-economy standards require automakers to achieve an average of 54.5 miles per gallon for new vehicles by 2025. And the first all-electric cars — such as the BMW i3, which can run for 80 miles on battery power alone — are now showing up in dealers’ showrooms.

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Transportation politics are endlessly thorny, and debates over paying for America’s highways frequently become debates about other issues, such as mass transit, federalism, and the environment. But the looming gas-tax shortfall offers a chance to repair the funding mechanism itself — one that currently disguises the costs of operating roads and gives the impression that using them is literally a free ride.

To be sure, the gas tax isn’t exactly running on fumes, however irresistible headline-writers find that metaphor. Federal taxes on gasoline added up to $25 billion in 2012; the federal tax on diesel raised almost $9 billion more. State and local fuel taxes account for an additional $40 billion annually. In Massachusetts, even before the gas tax was hiked to 24 cents per gallon last year, it was expected to bring in more than $675 million.

All the same, the writing is on the wall. Gasoline sales will keep falling, so taxes on those sales will fall as well. But highways and bridges still have to be built, upgraded, and maintained, and the money has to come from somewhere.

Actually, more money has to come from somewhere. Steel and concrete aren’t getting cheaper; neither are the expenses involved in hiring engineers and construction crews. According to Carl Davis, a policy analyst at the liberal Institute on Taxation and Economic Policy, highway construction and repair costs have climbed 55 percent over the past 20 years, while the federal gas tax has remained unchanged at 18.4 cents per gallon. “That means drivers today are chipping in the same $3 in federal taxes per tank of gas that they paid in 1993,” Davis says, “even as the construction projects being funded with that $3 have become much more expensive.”

The problem is clear. What’s the solution?

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Start with this broad principle: Highways should be paid for with funds that, first, are directly connected to the service they finance and, second, plainly visible to those paying them.

Fuel taxes are certainly connected to (most of) the benefits they’re meant to pay for: Motorists put wear and tear on the roads; taxing them when they gas up is a logical way of having them bear the costs they impose. But boosting gas taxes doesn’t solve the predicament of rising fuel efficiency. If anything, it exacerbates it: Crank up the tax on gasoline, and you give drivers more of an incentive to drive cars that use less of it, or none at all.

A bigger problem with gas taxes, though, is that they tend to be invisible. Unlike virtually every other product consumers buy, the tax paid on gasoline is hidden in the sticker price. Get a cup of coffee at Starbucks or a set of towels at Target, and the tax gets added to the listed price — and is identified as “tax” on your receipt. But the only reference to the taxes you pay at the gas station are the words in fine print on the pump: “All Taxes Included.” That lack of transparency is unhealthy as a matter of principle, since taxpayers should know how much they are forking over to the government. And it’s inefficient as a matter of policy, since it furthers the illusion that transportation infrastructure is “free.”

Taxing roads has always been a better option than taxing fuel. Highways shouldn’t be freeways; like any other convenience, they should be regarded by those who use them as a service to be paid for. That was once a heretical notion, but as electronic tolling technology has eliminated the need for physical booths and human collectors, toll roads are becoming more common.

Legislation proposed recently by the Obama administration would lift a longstanding restriction on the freedom of states to collect tolls on most interstate highways. That would open the door to a far sounder way of making motorists pay for the roads they use. Tolls, unlike gas taxes, can be automatically adjusted to reduce congestion. They are fairer than the existing system, which forces drivers who never get near a highway to subsidize those who use them all the time. And, of course, they offer no escape hatch for the owners of hybrids and electric cars.

Not even if they drive one of those fancy new BMWs.

Jeff Jacoby can be reached at jacoby@globe.com. Follow him on Twitter @jeff_jacoby

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