Transportation Gas Tax & Road Charges

Gas Tax & Road Charges

Reads at about grade 4Both sides shown9 sources cited

A gas tax charges drivers for each gallon of fuel to pay for roads; a proposed "road charge" would instead charge them for each mile they drive.

What it is

A gas tax is a tax added to every gallon of fuel you buy, and most of that money pays to build and fix roads. California's gas tax is the highest of any state -- a state law called SB 1 raised it by 12 cents a gallon, roughly doubling the state money sent to cities and counties for local roads. For a long time, the gas tax worked like a "user fee" -- a charge you pay based on how much you use something. The more you drove, the more gas you bought, and the more you paid toward roads. But that link is now breaking: cars go farther on each gallon today, and electric cars use no gas at all, so gas-tax money is shrinking even though roads still need work. One proposed replacement is a "road charge," or per-mile fee, that charges drivers for each mile they drive instead of taxing gas. California is testing this idea, and in one state pilot, 73 percent of drivers said a road charge felt fairer than the gas tax. Research broadly agrees on one point: the gas tax is regressive, meaning it takes a bigger share of income from low-income families than from rich ones. Switching to a per-mile charge would shift more of the cost onto higher-income homes, since they own more electric and hybrid cars. Measuring miles also raises privacy worries, since someone has to track how far you drive.

How it works

Roads and highways cost a lot to build and keep up. For a very long time, the main way America paid for them was the gas tax -- it was easy to collect, and it roughly matched use: heavy drivers bought more fuel and paid more. Then two things changed: cars got much more efficient, and electric cars arrived. A driver in a new electric car can use the roads every day and pay almost no gas tax, so the money now falls short. Nationwide, gas taxes and other driver fees cover only about half of what state and local governments spend on roads -- the rest comes from general taxes that everyone pays. To close the gap, states are studying a per-mile "road charge." The idea sounds simple, but it forces hard questions. Who should pay for roads -- only drivers, or everyone? Is a gas or per-mile charge fair to families who must drive a lot and can least afford it? And how do you count someone's miles without tracking where they go? People answer these questions differently, which is why this debate does not split neatly along party lines.

The debate — equal weight, both sides

The case for making drivers pay for the roads they use

Most often made by free-market and taxpayer-focused groups (such as the Tax Foundation and Reason Foundation) and by many transportation economists.

Roads are not free -- someone has to pay to build and fix them. Supporters of "user pays" funding give a simple answer: the people who use the roads should pay for them. As the Tax Foundation puts it, the gas tax "is meant to function as a user fee, charging drivers to fund the construction and maintenance of the roads they use." A user fee is fair in two ways: you pay based on how much you use, and people who rarely drive are not forced to pay for roads. When roads are paid for out of general taxes instead, they can feel "free" -- and the Tax Foundation warns this leaves them "overused or congested." But the gas tax no longer does this job well. Electric cars "don't pay fuel taxes at all, yet they cause similar wear and tear as other vehicles," the Reason Foundation writes, and efficient cars pay less than gas guzzlers for the same road use. That is not fair either. The fix, supporters say, is to charge by the mile, so everyone who uses the roads pays a share -- gas or electric. It brings back a simple rule: "the drivers who use them should pay for them." It can even help some people: research finds most rural drivers would pay less under a mileage fee than under a higher gas tax, and in California's pilot, most drivers called it fairer.

The case against putting the road-funding burden on drivers

Cross-cutting: raised by affordability and anti-tax voices on the right and by equity and civil-liberties voices on the left.

For most Californians, driving is not a luxury -- it is how they reach work, school, and the doctor. Critics say taxing that need falls hardest on those who can least afford it. In the words of the Institute on Taxation and Economic Policy, state gas taxes are "inevitably regressive -- impacting low-income families far more heavily than any other group." ("Regressive" means the tax takes a bigger share of income from the poor.) California feels this more than anywhere else. It has the highest gas tax in the country -- one analysis found Californians paid $4.62 a gallon in mid-2025, against a national average of $3.20, and called the state's fuel taxes and rules "regressive policies that disproportionately burden low-income populations." A per-mile road charge would not fix this; it could still bill a struggling family for every mile they must drive. Then there is privacy. To charge by the mile, someone has to count your miles, which can mean tracking where you go. Even the free-market Reason Foundation admits that "user privacy in the collection of MBUFs" (mileage-based user fees) "has emerged as a major public concern." Many people do not want the government to see where they drive. Critics also say roads help everyone, not just drivers -- trucks carry the food and goods we all buy, so the cost could come from broader sources. In fact, about half of road spending already does. And real relief for struggling families, ITEP notes, can come "via targeted low-income tax credits."

Sources

Behind the summary

Cited by "The case for making drivers pay for the roads they use"

Cited by "The case against putting the road-funding burden on drivers"

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