Energy Legislation and Gasoline Tax Revenue

Abstract

This article investigates the impact of changes in highway gasoline tax rates and gasoline efficiency on U.S. gasoline tax revenue, using a simultaneous equation model which incorporates highway mileage as one determinant of travel volume (hence user revenues) and travel volume (through highway trust fund revenues) as one determinant of highway mileage. The article concludes that: (1) a one-cent per gallon increase in the gasoline tax would be expected to increase annual gasoline tax revenues by $1.06 billion and (2) an increase in gasoline efficiency of one mile per gallon would be expected to decrease the annual gasoline tax revenue by $1.02 billion. The net effect of these two changes would thus be expected to result in a negligible increase in gasoline tax revenue.