HIGHWAY USERS TAXES AND TRUST FUND

In August 1982, the Parliament of the Commonwealth of Australia passed a major new road construction effort. The Australian Bicentennial Road Development Program (ABRD) will provide $2,000 million through 1988 to state and local governments in order to complete the 16,100-km national system of highways by 1988. This is in addition to the $3,650 million already committed by the Commonwealth through 1984/85 in the Road Grants Act. The ABRD will financed by a surcharge on motor fuel, the receipts of which will be earmarked for a trust fund for the program (1 cent per litre in 1982/83 and 2 cents per litre thereafter). In December 1982, the Congress of the United States passed a measure that will double the federal-aid highway program in 4 years. The congress increased federal highway motor-fuel tax rates on gasoline and diesel fuel from 4 cents to 9 cents per gallon, with 8 cents earmarked for the highway trust fund, which congress extended through 1988. User taxes on trucks were also increased with all receipts going to the trust fund. The paper examines the background to each of these major commitments of capital investment by the respective federal governments and what the decisions mean to the two countries. It summarizes some broad and fundamental similarities in Australian and American highway administration, and also summarizes briefly the background and context in which Australia made its 1982 decisions. Part II considers the background to the creation of the highway trust fund in the United States and the pressures that led to the 1982 act. Part III examines the US highway trust fund in somoe detail. The section includes a brief discussion of the strengths of the trust fund and how it operates. This is followed by an examination of how the trust fund has performed over the years and briefly mentions some potential problems in any trust fund. Part IV summarizes the Surface Transportation Assistance Act (STAA) of 1982. (TRRL)