STATE HIGHWAY USER TAXES: COMPARATIVE TAX STRUCTURES AND CURRENT TRENDS

An attempt is made to interrelate and analyze the important state highway user taxes within historical context. First are the registration fees for automobiles and light trucks. These are sometimes referred to as first-structure taxes. Second are the motor fuel, or second-structure, taxes. Third are the heavy-truck registration, weight, and mileage taxes, or third-structure taxes. Eighteen states increased and five states decreased their automobile registration fees in 1981. Some states have changed from flat fees to fees based on weight or horsepower to encourage the energy-saving potential of lighter vehicles. Five states base their fees on weight and age or value. This is one method of trading off the conficting values of energy conservation and not unduly penalizing low-income households that own older, heavier vehicles. A motor fuel tax is relatively inexpensive to administer and is most closely related to use, so the taxes to cover costs of providing highway service can be related to the benefits received. As a result, 26 states increased their motor fuel taxes in 1981. In order to keep up with inflation, eight states have completely converted their motor fuel tax from a cents-per-gallon to an ad valorem tax (percentage of price). Ten states have changed to a combined cents-per-gallon and ad valorem tax. User taxes for heavy trucks include graduated registration fees and weight, mileage, and gross-receipts taxes. Generally, states attempt to relate taxes to benefits obtained from highway service and the costs occasioned to the system and seek to minimize administrative costs of collecting the taxes. (Author)