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CHAPTER 6
Conclusions
NCHRP Report 377: Alternatives to Motor Fuel Taxes for 6.1.1 Motor Fuel Taxes
Financing Surface Transportation Improvements and subse-
quent studies have pointed out that continued improvements Revenues from motor fuel taxes represent the primary fund-
in fuel efficiency will likely diminish the effectiveness of motor ing source supporting the nation's highway programs. In recent
fuel taxes as a method for financing highways. In addition, years, however, the financial limitations of the current system
higher fuel prices, increased congestion, and telecommuting have become evident as revenues have failed to keep pace with
have resulted in shifting patterns of behavior, causing individ- the demands for highway investment. Furthermore, a number
uals to either drive less or switch to alternative modes. Inflation of constraints could collectively limit the long-term viability
also continues to erode the buying power of the motor fuel tax. of the motor fuel tax as a major funding source, including
As a result of these trends, the motor fuel tax system, which increased fuel efficiency, market penetration of alternative
forms the backbone of the nation's transportation funding fuels, price inflation, and volatility with respect to motor fuel
structure, faces long-term instability and uncertainty. prices. In addition to these revenue constraints, there is evi-
In today's environment, it is in the public's best interest to dence to suggest that motor fuel taxes have historically suffered
look beyond existing revenue-generation systems and more from a persistent problem with evasion. Historic changes in
closely examine the feasibility of alternative approaches. How- administrative and enforcement practices designed to address
ever, there is no clear indication of which approach will suc- the evasion issues (e.g., dyed fuel testing, taxation of kerosene
ceed in the long term. As a result, it is likely that transportation and other alternative fuels, enhanced auditing practices, mov-
agencies will implement existing and innovative approaches in ing the point of taxation up the distribution chain) have
combination to maximize funding and achieve mobility and increased revenues deposited in highway funds across the
connectivity objectives in the near and medium terms. nation; however, the long-term viability of the motor fuel tax
In order to provide a better understanding of the poten- remains uncertain.
tial implementation costs, it is essential to analyze and com-
pare collection, administrative, and enforcement costs for 6.1.2 Tolling
existing and alternative revenue-generation systems. Thus,
this report presents cost estimates relating to the administra- In the last 10 to 20 years, several practices and major trends
tive, collection, and enforcement costs for the following rev- have dramatically affected toll road operations:
enue systems used to finance road infrastructure: motor fuel
taxes, tolling, VMT fees, cordon/congestion pricing, and · The change in the governance structures of toll agencies,
parking pricing. including the establishment of multimodal agencies and the
introduction of private equity capital;
· The adoption of ETC systems, which permit the free flow of
6.1 Overview of Existing and
traffic at toll gantries and can improve traffic flow conditions
Alternative Revenue Generation
due to higher throughput;
This section presents general observations regarding each · Congestion management and the introduction of variable
of the five revenue systems examined in this report. Conclu- pricing schedules;
sions regarding collection, administrative, and enforcement · The use of leakage rates to measure the rate of driver non-
costs are presented in Section 6.2. payment; and
