Periodically there is discussion in the comments about the price of gasoline versus diesel, the differences in costs between various locales, and mention of fuel prices in the United States generally being lower than elsewhere in the world.
There are many factors contributing to the prices seen at the pump – pipeline price, transportation costs, and blend are just a few components. The element of fuel tax rarely has any mention. So let’s take a look at various fuel tax rates. They do have a distinct influence on the pump price.
This overview is not intended to be all encompassing nor is it intended to be political in any way. Rather, it is simply shining a light onto an otherwise rarely considered factor leading to what we all pay.
The United States
The United States Energy Information Administration reports the federal excise tax is $0.184 per gallon for gasoline and $0.244 per gallon for diesel. That is charged for every gallon pumped at any station within the United States.
Incidentally, this money is collected to help fund highway construction and maintenance around the country. The formula has been hotly contested at times as some states are donors while others are recipients; in other words, funds generated from within any given state don’t necessarily stay there.
In addition to the federal excise tax on fuel, each state then imposes its own fuel tax. While end use varies drastically by state, this money often goes toward highway construction and maintenance. Highways are like children – expensive every step of the way, from design to construction to maintenance. For instance, one can figure a 1″ thick layer of asphalt roadway one lane wide and one mile long will generally cost $55,000 in the Midwest. But this factoid is fodder for a future discussion.
The average of all state fuel taxes on gasoline is $0.2976 per gallon and $0.3178 per gallon of diesel fuel. There is a wide variety of tax rates and methodologies when examining each state individually.
For readers outside the United States, please keep in mind each state has a significant degree of autonomy; driver’s licenses, voter registration, vehicle sales tax, and a number of other issues are regulated by the states, not the federal government. To ensure insight along with brevity, discussion is being limited to locations in which various contributors live. This will work to give a decent cross-section of approaches.
Missouri
It seems the citizens of the great State of Missouri are vehemently opposed to gasoline taxes, as the rate has remained unchanged since approximately 1996 and is the second lowest in the nation. The gasoline tax here is $0.1742 per gallon. Only Alaska is lower at $0.1466
We inhabitants of the Show-Me State are a consistent bunch, as the excise tax on diesel is $0.1744 per gallon – the lowest in the nation. It, too, has remained unchanged since 1996.
In a seeming contrast, Missouri has the seventh largest state highway system in the nation and is ranked third highest in total disbursements per mile as well as having the third most effective state DOT. Missouri is also fifth best for rural arterial pavement condition, with routes such as Missouri Route 8 and 19 being likely candidates. Not bad for the chasm which exists between funding and size of the system.
Virginia
Virginia is fairly similar to our next state, seen below, as the gas tax in Virginia is thirty-ninth highest at $0.2195 per gallon. Diesel doesn’t drastically differ, ranking thirty-fifth, at $0.2471 per gallon according to the Institute on Transportation and Economic Policy. The Virginia Department of Motor Vehicles reports diesel fuel tax as being $0.202 per gallon. Please note there have been a few instances of minor discrepancies in reported tax rates; part of that could be attributed to planned tax increases and dates of reporting.
Like Missouri, Virginia has a larger state owned highway system than most would imagine. Virginia has the third largest system in the nation, ranking sixth lowest in urban fatality rate among the states.
Colorado
Colorado has the 38th highest gasoline tax (or the 12th lowest, if you prefer) at an even $0.22 per gallon. Diesel is also on the low end, being the 5th lowest at $0.205 per gallon.
Interestingly, the State of Colorado posts monthly fuel consumption within the state – presumably the compilation of motor fuel sales. In March 2020 there were 49,571,350 gallons of diesel consumed along with 142,953,000 gallons of gasohol and 19,400,000 gallons of gasoline.
From what can be determined, the excise tax on gasohol is the same as it is for diesel fuel.
The state highway system in Colorado is the twenty-ninth largest and is ranked forty-seventh best in rural interstate condition.
Oregon
Like Missouri, Oregon is consistent in ranking of fuel sales tax. Oregon has the thirteenth highest gasoline tax at $0.36 per gallon with diesel being fourteenth highest at the same $0.36.
Of the states examined, Oregon has a novel approach to taxation on the local level. This is because Oregon has thirty-three cities and counties levying a local fuel tax. Most, such as Eugene, have a flat rate, with Eugene’s being $0.05 per gallon. Some, such as the Cities of Newport and Woodburn, have variable fuel tax rates with greater rates during specific months of the year. These local tax rates range from $0.01 (when in effect) in Washington County to a consistent $0.10 in Portland. This is an excellent example of how comparing fuel prices between two different cities can be an inadvertent comparison between two highly dissimilar things.
For perspective Oregon has the 33rd largest state highway system and is the 9th best in the nation for rural arterial pavement condition; in other words, long two-lane highways in rural areas with Oregon Route 126 between Eugene and Redmond likely being a prime candidate for that classification.
Oregon was the first state in the nation to impose a fuel tax, doing so in 1919.
Indiana
Intrigued yet? In case you hadn’t noticed, these states have been placed in ascending order of tax rate. The Hoosier State has fuel taxes that are less straight-forward to calculate than the other states seen thus far. How so? According to the American Petroleum Institute, Indiana is one of seven states that charges sales tax on top of the basic excise tax. From what could be deciphered from the State of Indiana’s website, this sales tax is calculated monthly, using the average pump price plus flat rate excise tax, the sum of which is then subjected to the sales tax rate.
Other sources have boiled this down to a number somehow. As per the American Petroleum Institute, Indiana has the sixth highest rate in the nation for gasoline at $0.4662; the Institute for Taxation and Economic Policy has Indiana’s diesel tax pegged at $0.4900, a figure credited to the American Petroleum Institute. Methodology on how this number is derived is not outlined, creating author speculation if it was calculated over a certain period of time or by some other approach.
Since fuel tax is generally tied to the highway system, I have also been offering the relative size of each state’s state owned highway system, with Indiana having the twenty-third largest. Indiana’s rural and urban interstate pavement condition is ranked as being forth-third best (or seventh worst) in the nation.
Illinois
Like Indiana, Illinois also utilizes a sales tax on gasoline and diesel fuel. Thus, this variable rate is equally challenged to define as a set number.
However, using the same source for Illinois as was used for Indiana, Illinois has the third highest gasoline tax in the nation at $0.5498 per gallon. Diesel fuel does not rank as high for Illinois, being eleventh highest at $0.3902 per gallon.
Of the fifty states, Illinois has the eleventh largest state highway system, is forty-second in total disbursements per mile, and is third in rural arterial pavement condition. Likely candidates for that category might be Illinois Route 3 or 127.
Which state has the highest fuel taxes? California. Gasoline tax is reported as being $0.6102 per gallon with diesel at $0.8583 as per the American Petroleum Institute.
Ontario
This is where units of volume come into play. Canada, like the vast majority of the planet, uses the metric system for fuel quantity. Their standard volume is a liter (or litre) which is just under one-third the volume of a gallon. The fuel tax in Ontario doesn’t sound too bad in raw figure form; it is $0.147 for gasoline and $0.143 for diesel. This is on top of the national $0.10 and $0.04, respectively, along with the 5% federal tax and 13% Ontario fuel tax. This provincial rate of $0.147 for gasoline equates to $0.5413 per gallon. But this is Canada dollars, which translates to $0.40 as of July 17.
In addition, there is a carbon tax of $0.0663 for gasoline and $0.0805 for diesel.
There are 10,300 miles of provincial owned and maintained highways in Ontario.
Elsewhere
Finding the rate of fuel taxes for some countries has proven to be difficult. The U.S. Department of Energy, in a March 2019 report, outlined the fuel tax rates, given in units of U.S. dollars per gallon, for a number of countries, thus why a number of countries are being presented simultaneously (Canada and Ontario provincial were relatively easy, so it was presented independently). This report can be found here.
For simplicity, as well as for providing a better visual, here are some countries with contributors and/or frequent commenters. All values have been pulled from the website linked in the prior paragraph.
One note of caution about this information. In researching specific places, such as the United Kingdom, one needs to be aware there is a value added tax (VAT) along with periodic road user taxes. Those from the United Kingdom (and elsewhere) could elaborate further, but whether or not these costs are rolled into the costs shown here has not been determined. However, the basic premise of the VAT is not unlike what is found in Indiana and Illinois.
Hopefully this helps shine some light on the wide variety of fuel taxes and fuel tax methodologies around the globe. In this research several distinct items have been learned – there are countless ways to tax fuel along with discovering Brazil, Indonesia, and Russia have lower fuel taxes than does the United States.
Plus one thing is a near guarantee – many of those reading this will now be thinking about the amount of tax they are paying during their next stop at the service station.
Indiana’s 7% sales tax is fairly stiff as sales taxes go these days. It is my understanding that sales taxes go into general revenue while the gas tax is earmarked for highway maintenance and construction.
So does the (rounded) $.47 include the sales tax? The sales tax would be $.14 on a $2 gallon, and it is interesting that we are paying tax on tax (7% sales tax is being collected on the excise tax). Hmmm.
At least in my part of Indiana those relatively high gasoline taxes does not result in highway construction or repair. Some of the state highways here look like they have been bombed. I’m sure that it is just the luck of the draw that the closer you get to Indianapolis, the better the highways. I don’t know the exact figures but the state of Kentucky has lower gasoline taxes than does Indiana. Gas is typically 10-40 cents cheaper once you cross the Ohio River. For me it is not enough of a difference justify the drive, but if I’m going to Kentucky anyway (my four siblings all still live in our hometown), I try to make sure that I fill up the car.
“the closer you get to Indianapolis, the better the highways.”
It would appear that you are just living in the wrong place. 🙂
Seriously, I would not doubt it. Having the legislature and Governor and Supreme Court right here surely has an effect. A couple of mayors ago the Mayor lived in my general area of the city and snow removal was always quick to happen in the general vicinity of his neighborhood. I suspect this is a universal phenomenon.
I’m sure that it is. Here in Evansville we really don’t get a lot of snow and, as a result, neither the city nor the county has much in the way of snow removal equipment. You can bet that the streets where the mayor and city councilman are high on the priority list for getting plowed. The subdivision where I live is fairly close to two elementary schools; the street gets plowed to the edge of the school property and they leave the rest for God to deal with. My driveway is on the north side of my house and doesn’t get much sun in winter. On the one had I’m no longer physically able to shovel the driveway, on the other hand I don’t have to get out and go anywhere so I just wait for the snow to melt.
Does the $0.47 include the sales tax? That is one I could not easily determine and some criteria had to be used for the sales tax states so a pat number could be determined.
If you want something fun to read, look at Indiana’s explanation of sales tax calculation. Having looked at the websites of six states and one province, it is amazing how the same basic information can be presented either very straightforward or not.
Be grateful for “stiff” sales tax in your state. We have 19% sales tax in Germany, which recently has been lowered to 16% until 31 December 2020 to encourage more consumer spending. Food stuff and certain items are taxed at 7% but temporarily lowered to 5%.
Now compare the level of social supports in Germany vs the USA. If you want to give social services up, you can have lower taxes.
Thank you for including Ontario as a separate entry. Our fuel taxes are contentious as our provincial moderately- conservative government is at odds with our moderately- liberal federal government. Each has taxed our fuel and objected to the others’ tax policy, particularly our new carbon tax. This carbon tax was federall mandated and opposed provincially. Generally the province wants lower taxes to boost the local economy but the feds want higher taxes for revenue and for environmental ideology.
This federal carbon tax was forced upon the province. In response the provincial government (intending to shame the feds) mandated every fuel pump receives a label showing all consumers where their fuel dollars go, the portion to the retailer, to the fuel manufacturer and to the various levels of government. So Ontario consumers get a lesson in fuel taxes every time they fill up.
Canadian civil liberties association filed suit last year against the provincial government, alleging that forcing placement of those labels is unconstitutional. While the province did vote in the conservative government, a majority of its citizens probably supported the carbon tax.
Interesting topic, and thanks for highlighting Virginia!
Virginia’s current tax may be somewhat low, but our legislature passed a big tax increase this past session, so next year, taxes will rise quite a bit.
When I moved to Virginia from Maryland 20 years ago, I was very impressed by this state. Taxes were low, and government services were very good. It’s gone downhill in recent years – taxes of all kinds have been raised, and gov’t services are slipping. Transportation is a good example because many of the recent big transportation projects in my area have been expensive and seem largely worthless from a transportation standpoint. There’s undoubtedly several reasons for this, but one is that the state has begun to give localities more control over choosing projects – which on the surface seems like a good idea, but in reality many of the projects are now made primarily to benefit developers or special-interest groups. In short, it seems that the state used to run a fairly efficient operation regarding its roads, but that’s not quite the case any longer.
When my wife moved here in 2000 from Missouri, she thought that Virginia was better-run state. Now, she thinks that Missouri is better run (and with lower taxes, too). Funny how things change.
Interestingly, you mentioned that Virginia has a huge state road network, and that has an interesting history. The state took over control of all roads in every county back in 1932 (just counties, not cities, which in Virginia are totally separate from counties). This was done as a consequence of the Great Depression, and it can be viewed in two ways… either that it lifted the burden of road construction/maintenance from the counties, or that it was simply a power grab by the governor done by taking advantage of an emergency. I’ll let historians iron that one out, but in any event, it makes for an interesting road network. In most Virginia counties, even the smallest neighborhood street is a state-owned roadway. From what I understand, only North Carolina, West Virginia, Delaware and Alaska have a similar arrangement these days.
If interested, you can read more about the 1932 state takeover of county roads here:
Byrd Road Act
Today, many of the state’s urban counties want to gain more control of roads (mostly secondary roads), but aren’t too anxious to start paying for them again.
Part of Virginia’s history mirrors Missouri highway history.
In the early 1950s there was a big push for a $0.02 gas tax here. Part of the proposal (which was up for public vote, as are any taxes in the state over so many million generated, thanks to a constitutional amendment) was for the state to take over an abundance of what were then county roads. The tax passed and all the lettered routes you’ve seen while visiting here are those roads the state took over.
The selling point of the “Get Missouri Out Of The Mud” campaign was 95% of the state’s residents would live within one mile of a state owned and maintained road. Population shifts have really made that point obsolete.
Eric,
I moved to Virginia from Maryland 23 years ago. I found that income and gas taxes were far lower here than in Maryland. However, I found that, unlike Maryland, groceries are taxed and I had to learn quickly the concept of a personal property tax on cars. Although taxes here have creeped up during my time, frequent trips to Maryland have demonstrated to me that sales taxes on everything have increased dramatically.
Yes, the personal property tax in Va. is onerous – Maryland wins on that one. Like Constellation mentions below, this is another source of taxation that varies greatly state-by-state. And in some states, registration and vehicle taxes go to transportation improvements, and in some states they just go to the General Fund. It’s certainly not easy to compare the cost of driving (or the cost of living) among various jurisdictions.
I remember when I moved TO Maryland (from North Carolina), I had to pay 6% of the value of my 2-year-old Ford Contour just to register my car there. And on top of that, they bumped up the assessment because it had “low miles.” Grr.
Guys, please don’t give the People’s Republic of Maryland any ideas.
Ssshhhhhhh…. I don’t want to pay property taxes on my cars, mmmkay?
😂
It’s been almost 50 years since we last lived in Virginia and I was still a dependent back then, but do remember we had a set of additional (small) plates we had to attach to the (back as I recall) of the car, under the state plate, which were for the local (county I think). They were as wide as the state plate but I think only a quarter as tall…and as I never owned my own car at that time (though I was first registered as a driver just as soon as I was 15 years 8 months old for my learner’s permit), I don’t know what additional cost was. Don’t know if they still do that.
I live in the south now, but my first job out of college I moved to Massachusetts (off rte 97, which coincidentally connected to the same town I was born in, though we moved soon after and many different places). I still had my college car, which wasn’t worth much, but still had to pay excise tax yearly for the value (don’t recall how that was figured).
Also had bank account in my former state, and remember they taxed it at significantly higher rate than in-state account, so I quickly closed it and opened one in Massachusetts (still have account there, almost 40 years later). Also, when I moved I tried to get my own auto insurance (instead of under my parents) and found they weren’t motivated to issuing “new” accounts, even though I was applying for insurance under the same company, but in a different state, and under my own name, think it had to do with the no-fault insurance rates which I guess the company thought of as too low, but I actually was insulted by the person I finally got the policy from, nothing really personal, but due to my age, he said something like “You’re not worth spit” or something to that effect…but I was in a bind, needed insurance, so I overlooked the slur (not sure what I would do now, my perspective is of course different with age).
Don’t keep track of anyone in Virginia anymore (too many moves, lost contact) but have Cousins in Massachusetts and one was comparing taxes with me, and of course it is hard to make exact comparison, but pretty clear he paid more than I overall for his taxes on home, car, personal than I
Something else to take into account in Canada (at least in most provinces) is that the sales tax (or in the case of my province, New Brunswick 15% HST) is charged on top of the other taxes.
This means they are taxing the taxes. Fun times.
At current exchange rates, the total tax per gallon in NB in USD is $1.05.
This is also the approach in Australia – Goods and Services Tax (GST) is an additional 10% of the total price including excise.
Yes, this IS political because rates of taxation is a political subject, and rates are determined by a political process.
So many variables in the numbers–NJ’s per gallon gas tax is 41.4 cents, which is pretty high–but we generally pay less for the gas itself (for mysterious reasons), so the consumer may actually pay LESS than the national average overall. Plus the spot and futures price of gasoline fluctuates daily on the commodity trading markets.
An unanswered question is: Why are the gas taxes in the foreign countries shown in the last chart so HIGH? This seems an inordinate burden on the local population, who must buy small, high MPG vehicles which they may not want, if given a choice.
And how long before “creeping socialism” forces American motorists (especially us ’58 Cadillac owners) to pay $3+ tax per gallon (as in England and Holland), which would REALLY be obscene!
CC readers are smart–I’m sure they have the answers . . .
There is indeed a political element in fuel taxes. Really, is there an area in which politics doesn’t get involved with transportation? Politics is, sadly, a key component of life.
However, my statement about not being political is just that. I reported on what exists while doing my best to not editorialize; I’ve avoided political discussion for over 8 years contributing here; why start now? If one is so inclined as to inject politics into their processing of this information that is fine but I was optimistic we would all be considerate enough to avoid verbalizing such things. My only intent was to shine a light on the subject matter by educating everyone about locales far from where they live.
Everyone will have their own conclusion regardless and even if it were discussed nobody would sway anyone else’s opinions about the matter.
Why are the gas taxes in the foreign countries shown in the last chart so HIGH?
Because in Europe, gas taxes are not only used for road/highway repair/building, but a part of it goes into the general fund, or to mass transit, and other non road use areas of the budget. Why? because in Europe, driving has always been seen as something more of a luxury than a necessity, as it was seen in the US, where population density was massively lower and distances drastically higher.
The reality is that in Europe, cars really were a luxury, and can legitimately be seen as that still today, perhaps even more so today, given the inherent negative impacts that cars have on the environment and human health.
We grew up as a family in Austria in the ’50s when not a single one of my large extended family had a car. These were all professional people. My father, who had a driver’s license, was a doctor. My uncles and aunts were engineers, etc..
We all seemed to have managed ok without cars. We went hiking on weekends (trains and buses took us to our destinations), we got around town with trams, buses , bikes and lots of walking, which is a very healthy activity. Workers walked to their nearby jobs, or took a tram or bus, and came home for the mid day meal.
Cars became affordable in Austria starting around 1960, about the time we left. But they were rightfully seen as a luxury; nobody really needed one. Well, obviously some did, in certain situations, but they were given work/company cars. You had to rent a garage space for it, which might be several blocks away. And unless you needed it for work (out of town travel) you only got it out on Saturday, for weekend use, or for summer vacations.
Western European countries are democracies (in case you have forgotten that), and they are quite happy with the social supports (universal health care, child care, free/very cheap universities, long term unemployment, etc.). Even the most conservative politicians wouldn’t dream of suggesting eliminating any single aspect of the social supports. Europeans generally feel sorry for Americans about the lack of those supports and the low wages in the US. Where they once saw the US as a place to aspire to, to want to move to, that’s not been the case in quite a long time.
My point is simply that Europeans are obviously quite willing to have drivers pay for high fuel prices, given what they get in return. No one is forcing on them. Of course some complain; that’s always the case. But they are in the minority, because if any political party had a platform to reduce fuel taxes in exchange for certain social benefits being cut, they wouldn’t get any traction. History has shown that convincingly.
And how long before “creeping socialism” forces American motorists (especially us ’58 Cadillac owners) to pay $3 tax per gallon (as in England and Holland), which would REALLY be obscene!
If Americans democratically chose to tax themselves $3 per gallon taxes, then it would happen. But that’s not very likely, right? The federal gas tax has been going down compared to inflation for a long time, right? In fact, it’s gone down 55% since the last time it was raised in 1993.
And why? Because your ’58 Cadillac is obviously a necessity of life and not a “luxury”, right? So Americans undoubtedly will keep the gas tax low to preserve the necessity of you fueling your ’58 Cadillac as cheaply as possible. Anything other than that would be obviously obscene.
Liberty…tastes like a ‘58 Caddy…and it’s delicious!
To each their own. Ironically (or not), the ’58 Cadillac was held up as a symbol of garish excess already in 1958! 🙂
Paul,
I’m glad you posted this answer, as I have never lived in or traveled to Europe, and I think I (and many other Americans) tend to see things from a distinctly “American” point of view. The context helps explain things.
As pointed out below, historically the gas tax is relatively low, and gas is cheap (which is good for everybody, except perhaps the oil companies!)
In NJ, property tax is the big horror, and it is high and going higher, seemingly no matter which politicians are elected. And it is very hard to know exactly what we state taxpayers are getting for our money.
it is very hard to know exactly what we state taxpayers are getting for our money.
It’s really not hard to find out. It’s all very public information, available online.
That applies for information about Europe too, or just about any subject. One doesn’t need to travel to learn. In fact I suspect that most Americans who visit Europe learn quite little about how Europe actually is, and how it’s different (and not) from the US. One needs to read (the right sources) for that kind of information.
What tends to come across from your comment (and from so many Americans’ opinions) is that a lack of knowledge almost invariably breeds suspicion and negativity. That’s unfortunate, because a democracy only works really effectively if the voters are properly informed in order to make good choices at the polls (and otherwise).
I would argue that cheap gas is actually not good for anybody or the planet. As Paul’s comment aptly explains.
I like cars, but at the same time if I could live somewhere where a car was not effectively required to be able function I could happily give up driving and cars.
Unfortunately I cannot move to such a place anytime soon.
Cheap gas (and diesel), is the big driver of the powerful USA economy. The US economy is so strong that it pulls the entire rest of the world with it as well. European economies are weak and pathetic, largely because of their high tax rates on fuel and everything else. Say what you will about it, but a strong economy is good for everyone, the poor, the disadvantaged, everyone. Good economies can spend more money on health care, cleaner environment, public works, infrastructure, etc.
Duaney, I’m not sure you can arguably say that the US healthcare system is a model of excellence. I’d also suggest riding some European passenger rail if you want to talk about infrastructure.
@ Duaney: the author of this excellent article requested that politics be kept out of the discussion, but your uninformed comment cannot go unanswered. Higher taxes in Europe pay for better health care systems, among other items. Compare infant mortality, longevity, and poverty rates in northern Europe to the US before calling European economies “weak and pathetic”. Bumper sticker seen while ago: “Want civilization? Pay taxes”
@Duaney
“Cheap gas (and diesel), is the big driver of the powerful USA economy. The US economy is so strong that it pulls the entire rest of the world with it as well.”
The US is the country in the world with highest debt. Yes the US economy is big, but how much of it benefit the average american?
US states divert gas taxes to mass transit and other non-automobile uses too. Several Northeast states divert more than 35% but surprisingly Texas diverts 25%, fairly high against a states average of <10%.
The Reason Foundation released a report last month detailing those gasoline tax diversions called "How Much Gas Tax Money States Divert Away From Roads".
Texas may divert some of their fuel tax funds, but Texans have voted twice (Prop 1, 2014; Prop 7, 2015) to increase funding for the SHF (State Highway Fund) using other state revenue. So it’s just a matter of how the money flows, but Texans are obviously concerned about the state of their highways, and are voting for more funding for them.
Texas voters chose to increase their gasoline tax instead of implementing an income tax. Their 25% diversion of gasoline taxes goes entirely to schools, which makes sense, balancing school funding between real property owners and automobile drivers.
What are EURO politicians going to do when the gasoline tax runs dry with all running around in EV’s??
Tax windmills??
I don’t have a crystal ball. But I’m sure they’ll find some way to keep paying for the programs that the electorate wants.
Well, I think part of it in the US was the prosperity that seemed to start after the War (WWII). My grandparents on either side were hardly well off (my Mother is 1st generation American, her first language is Slovak), but they did get a car in early 1950’s (Grandpa ran a Mom/Pop store and though he got some deliveries he did use the car to pick up some items himself). My Dad’s father I don’t think owned a car until he bought the 1963 Fairlane, but they seemed to borrow (mooch?) cars from friends/relatives when they needed them. They also lived in cities with pretty good transport (buses and trains back then still common) but both parents say they walked a lot, almost everywhere they went, and pretty long distances (by my standards, a 6-9 mile walk would be routine and maybe done multiple times a day…wonder when they found time to work and (cook). The grandfather with the store was open 12 hours/day for 6 days/week, so he routinely worked 84 hour weeks (though he was spelled by my grandmother, mother, and great uncle, but that’s a lot of hours to do routinely…I’ve done them at times but never for years on end.
Neither of my Grandmothers could drive.
My Dad was pretty fortunate, he got his degree in chemistry in 1956 and started working on semiconductors (for Sylvania) which with one brief exception he was able to make a career of….unlike me he was never laid off (well, I’m sure he was fired, but more for political reasons). He bought a new 1956 Plymouth Plaza (no options, flathead 6 with column manual shift, wonder if it had a heater?)…but he moved away from my Grandparents almost immediately as he couldn’t work in his field in their town…fortunately he did meet my Mother in that town, I think he had actually moved away but was back for a visit when he met her; they moved to another state after they married and though they did return to a (different part) of the state later on, my Dad never did live in his hometown, which I also think of as my hometown as we moved many times while I was growing up, not quite as much as being in the military, but almost…though they made up for it later on, my Mother has lived in her same house just about 40 years…twice as long as the preceding period they did all the moving.
I’ve taken the bus in my current city, but it isn’t particularly easy as there are large sections where there isn’t any service, so walking is required. As I live in the sunbelt, I usually arrive at my destination sweating (even early in the day) so it isn’t great if you want to look composed upon arrival. Even took public transportation in Los Angeles area, Pasadena to Long Beach, which took quite awhile (maybe not the smartest choice if you’re trying to maximize time at destinations…but I wanted to see the city as a non-driver too, getting there was part of the sight seeing for me. Maybe I’m just going back to my parents time, before either of their families owned a car…70 years ago.
My city imposes a 1% of the local sales tax to fund public transit, which is tough sell in the sunbelt. Back in 2008 I remember the buses being pretty full most of the time since gas prices were high…but they’ve gotten more empty (even pre-covid). Prosperity seems to drive people back to their cars (plus low gas prices) and I think a lot of my friends think I’m strange for taking public tranport, even offering to take me in their cars back home. People have even stopped seeing me walking (not hitching) and offered me a ride…maybe I look pretty sorry to them on a hot day?
And how long before “creeping socialism” forces American motorists (especially us ’58 Cadillac owners) to pay $3+ tax per gallon (as in England and Holland), which would REALLY be obscene!
That didn’t seem to dissuade the Germans and Europeans from driving larger or heavier saloons and SUVs from Mercedes-Benz, BMW, Audi, Porsche, etc. because they can afford the higher fuel price, anyway.
When I lived in California, I had seen lot of Americans driving large pick-up trucks and SUVs as their “single occupied” personal transportation and little else. When the fuel price exploded following the Great Recession of 2008–2009, many of them felt rueful about owning the thirsty pick-up trucks and SUVS and wondering how would they be able to afford around $4 per gallon, especially in California.
Driving a 1958 Cadillac today is more of an indulgence than necessity, me thinks.
But that moment of frugality was just that, a moment, and quickly forgotten.
Interesting information that obviously took a ton of research, Thanks Jason. California’s fuel taxes and fuel prices are certainly very high, by US standards, and exaggerated even more in remote locations where high demand and difficulty of supply can result in prices north of $5 per gallon. And despite folks in upper Midwest and New England states complaining (bragging?) about how bad their potholes are, many California roads are in terrible shape. But, a small portion of our gasoline taxes does go to our network of state Off Highway Vehicle (OHV) vehicle parks for folks who want even rougher roads. Our high prices seem to do little to discourage the popularity of thirsty pickups, extended idling while parked and staring at cell phones, and single vehicle use or driving around parking lots looking for a spot 20’ closer to the entrance.
In the early 90s, I had a job that took me to various points along the Indiana-Illinois border.
On the Illinois side were liquor stores. Most of the cars in the lot had Indiana plates, because liquor taxes were much cheaper than in Indiana.
On the Indiana side were tobacconists. With parking lots full of cars with Illinois plates, because tobacco taxes were significantly lower in Indiana.
Something worth mentioning about fuel taxes is how many states are now charging an additional, annual registration fee for plug-in vehicles (and some vehicles that don’t plug-in but have a battery, i.e., pure hybrids like the original Prius). The theory is that since these vehicles use less gas (or none at all), the owners aren’t paying their fair share of the fuel tax that those with much lower fuel mileage (gas-guzzlers) while driving on the same highways and roads.
The logic isn’t particularly bad except, in theory, shouldn’t people with gas-guzzlers then pay ‘less’ in annual registration fees because they pay ‘more’ gas tax? And then there’s the fact that plug-in vehicles are still paying for the electricity used to charge their vehicles.
Frankly, the plug-in fee seems like a penalty to those individuals who want a vehicle that gets the best possible fuel mileage, not to mention that the revenue derived from these additional fees are a mere pittance, given the very low number of plug-in vehicles relative to conventional vehicles.
It’s been suggested (and hotly debated) that the annual plug-in fee is much more political (than practical) in nature and is the result of intense lobbying by oil industry investors who take a financial hit when demand for oil drops.
It’s a serious problem not just because of EVs and hybrids, since all cars have been steadily improving their fuel sufficiency. Yet for the most part, fuel taxes are not going up to compensate, or even going down compared to inflation. So bitching about pavement quality when the average driver pays less and less fuel taxes over time is a curious thing, although very much consistent with human behavior.
It might have been useful to point out that the 18.4 cent federal gas tax was last increased in 1993, and is not indexed to inflation. That means that its adjusted value is now effectively 10.18 cents. In other words, it’s gone down 55% since 1993 in real cents.
The first federal gas tax was enacted in 1932, at 1 cent per gallon. In adjusted dollars, that’s actually higher than the current gas tax.
In 1949, it was raised to 5 cents, which is 54 cents in adjusted cents, or 300% higher than today.
When he was governor of Arkansas in 1982, Bill Clinton had the registration fee raised from $19 to $37. He lost the next election as a consequence. I believe the elder Bush raised the gas tax to take effect in 1993. As I recall he paid a price in the 1992 election. Unfortunately, the explanations Paul sets forth in his mini essay are far beyond the comprehensions of many, many Americans.
Indeed, a logical, sensible solution would seem to be a national gas tax tied to annual inflation rates. The problem is advocating such a thing (let alone voting for it), would be political suicide. Thus, it ain’t happening.
The variation I notice in state taxation is that for annual registration, initial titling and sales tax (or not) when purchasing. There are huge variations and many obvious incentives for car owners to register in various other states and obvious incentives by which states may encourage the purchase of a particular type of vehicle (gasoline/diesel/electric/hybrid). There are city and state registration fees; there are state and county sales taxes; there are state and county ad valorem taxes – often at at reduced rates as the vehicle ages; there are safety and/or emission inspection fees (or not).
This is a completely other subject and I don’t mean to dismiss Jason’s story; I enjoyed it. My point is car owners have to contend with other, maybe more insidious, tax schemes too.
I came >this< close to including sales tax and registration fees in here. Perhaps in the future. This got long enough as it was without those. You are very correct on sales tax. I looked at Oregon's and it was rather attractive relative to other states, such as mine. When I purchased my first new car in 1996, I was living in Cole County and within the city limits of Jefferson City, which prompted a higher sales tax rate of 7+%. Thus, I registered the car across the state at my grandparent's house well outside of any town in Scott County at 4.225%. It was easy, as I simply went to their license bureau office and paid my sales tax. Would I do that now? Likely not.
It is a felony in the State of Minnesota to register your vehicle in another state. I came across this tidbit when researching buying a RV out of state. Montana, South Dakota and I believe Texas are some of the favored spots to register. Interestingly the annual renewal of tabs for the trailer is about $25 in Minnesota the vehicles are MUCH higher, gradually descending to cheap at ten years of age or over ten years of age.
I worked for the Minnesota DOT for almost 24 years, interesting to see the taxation rate from the other side. My area was fleet operations, getting funds for replacement vehicles was always a battle. The plow trucks eventually ate more than 80% of the yearly equipment budget. Good luck if you needed to buy some other big piece of equipment. As the price of the vehicles shot up the repair costs jumped too. The final nail in the coffin was reliability was dropping too, the new emissions systems on the diesels are not very reliable. As Yogi Berra said, it was deja vu all over again. We had experienced the same thing with the gas engines back in the 70-80’s era. Throw some crap system on to meet emissions and then we can work on fixing it. So glad I am retired from that rat race.
Interesting article! I’d like to add about Germany…
Due to the federal structure in Germany, everything is pretty much uniform amongst 16 states: driver’s licences, traffic laws, fuel taxes, etc.
The fuel price for petrol is 65% taxes (energy tax, ecology tax, 19% sales tax, and Erdölbevorratungsbeitrag—stockage tax), 27% product cost (average), and 8% ancillary cost (average).
The energy tax is €0.6547 per litre for petrol and €0.4704 for diesel, €0.19 per kilogram for CNG/LNG and €0.23 for Autogas/LPG (about €0.12 per litre). For US audience, $2.93 per gallon and $2.11, $0.49 per pound and $0.59 respectively.
Due to the drop of sales tax from 19% to 16% on 1 July 2020 as to encourage the consumer spending, the fuel price has dropped down. The lowest average price is €1.05 for diesel, €1.21 for E10 petrol, and €1.25 for super petrol.
Daily or frequently driven Dedicated Gas Boozers run on LPG here. Those DGBs mainly are: pickups, off-roaders, (conversion) vans, motorhomes and many other V8 land vehicles (classic or of a more recent date), all of them born in the US.
If I converted everything correctly, the current pump price for LPG is around $ 3.40 a gallon. It’s available at every street corner, the fuel mileage is around 15% worse, compared with gasoline.
The LPG on fatties used to be very common here too because taxes make the gas effectively half that of petrol, but the old Holdens, etc, have become collector pieces, and no-one bothers now. The modern V8’s (including late model Holdens and Fords) give 22-25 mpg in reasonable use, so at our prices – not tiny, but not European-sized – it’s still not worth it. The small number of folk buying such cars knew they’d be paying more for their toy over time, and accept it.
About 98% of every ute, truck, off roader, and SUV is bought as a diesel.
Btw, did you know you can get mixed LPG/diesel fuel conversions? I was astounded to find that out recently.
Diesel/LNG-combination yes, but I didn’t know about diesel/LPG.
In European and Japanese SUVs and light commercial vehicles (vans, pickups, chassis-cabs), a diesel engine is also by far the most common choice here. Vehicles as the Land Cruiser 150-series (Prado) and the HiLux aren’t even offered with a gasoline engine.
But something like a Ram 1500? I only see (and hear) them with the 5.7 liter V8 running on LPG, instead of the 3.0 V6 VM Motori turbodiesel. Funny, the only Euro-FCA products with that VM engine are built by Maserati…
To me it has always been interesting (and suspicious) that to find out gas taxes takes research, while all other taxes when you buy something are printed on the receipt. Also, media discussion of fuel prices will just give prices in varying areas like it has something to do with location and never mention that the difference comes from taxes. It’s almost like they don’t want you to think about it or something.
Gas taxes are required to be displayed on every gas pump. Does that require research?
As a matter of fact, it’s not just taxes that affect varying retail prices regionally. There’s a number of factors, including proximity to refineries, degree of genuine competition, and other factors. For instance prices on the West Coast tend to be higher (in addition to taxes) because we are dependent on fewer refineries out here. And CA mandates special fuel blends. And…
Yes, the media is trying to keep you from thinking. 🙂
I mentioned it here some time in the past, but it bears repeating.
The cost of gasoline is much higher in the US than the stated price per gallon, if you factor in the dozens of military bases spread across oil-producing countries and the cost of protecting the entire Western imported oil supply chain. This must function as an enormous tax, would it not?
That’s what I think of whenever people talk about gas prices. Its hard to focus on the small money when the big money is secretly there in the background, going on the credit card.
Just my two cents.
Plus tax.😊
You can bet your sweet bippy that if we magically stopped using oil we would still have that large military presence for other reasons. (That’s not even getting into the huge oil resources we have right here in North America.)
There are people that like to conjure up “true costs” out of whole cloth in order to push some kind of agenda. I’m not buying it. (I’m also not buying a hybrid or electric car, but that’s another story.)
Gas taxes are an exceedingly small part of the cost of driving. Cents-per-mile it’s pretty damn cheap. And it’s not enough to pay for the roads we want, if all the roads we want are even possible to create.
I’m all for using gas taxes to maintain the roads, bridges, tunnels, etc. – and not for anything else. (I am also in favor of adding other taxes or fees to the operation of electric vehicle so those owning them pay their share.)
A problem is that the gas tax produces a large pool of funds which politicians and bureaucrats cannot resist raiding for other purposes. Then they raise the tax saying there is not enough money for road maintenance, and of course they ultimately raid those funds as well. Rinse and repeat ad nauseum.
The gas tax can’t buy as much roads as Americans think it does. It simply doesn’t.
We’ve been getting a damn cheap ride for quite a while, and it’s not going to last forever. The more we say “Put all that towards infrastructure” the more beancounters will take a look at the total costs and it will not be pretty.
In the State of Minnesota when I started purchasing vehicles and equipment for the DOT all of our purchases were tax exempt. Then we started paying sales tax on equipment purchases and eventually we started paying excise taxes on vehicle purchases. So the state takes the money from the tax payer and puts in the back pocket for road building, etc, meanwhile the front pockets are reaching into that back pocket and grabbing a handful for themselves. Convoluted to be sure.
Americans love insurance. They buy into it at the slightest suggestion. “Would you like to buy the extended warranty for only $17.95? On a $90 toaster oven? NO! Extended car warranty for $3500? F#%K NO! IF, that is IF the car breaks, I’ll pay for it then. Yet somehow Americans need to be different from the rest of the world. They are so opposed to paying a little more in taxes, such as fuel taxes, like other countries do, but those same taxes double as insurance in other countries. They insure that you don’t live out your last year’s dying in medical debt. They insure that your pre existing condition doesn’t disqualify you from medical coverage. They insure that when you change jobs or….. Start a business you have medical coverage. If you need an ambulance, you don’t have to worry about paying your rent. I believe that I’ve left politics out of this comment, and just presented things as they are.
Exactly.
It was determined several years ago that if the defense cost component was factored in, gas would cost more than double what it was selling for. Who believes that the U.S. presence in the Middle East is not principally about oil or that both invasions of Iraq were not about oil? Why is there always a U.S. carrier presence in the area?
Eliminate most of that and you are reducing the defense budget by a not inconsiderable amount. The taxpayers that use the least amount of fuel are subsidizing for those who use the most.
42.3 cents per litre excise and 10% GST on top in Australia. I think I paid around AUD $1.23/litre for 91 octane (regular for us) when I last filled up. Prices in my area at least were north of $1.50/litre pre-pandemic but that is another topic.
My impression is there’s more concern about perceived gouging by oil companies and service station operators than the tax component. There are also mysterious variables such as the so-called ‘Canberra tax’ under which Australian Capital Territory residents pay more for fuel and other goods than comparatively remote locations in surrounding New South Wales for no obvious reason apart from our incomes generally being higher.
Not sure where the data for NZ originated from, but it’s a little out. We pay 194c/gal (both US) at the moment. Most of this is allocated to roading. If you’re in the Auckland area there’s an additional 25.22c/gal for “Regional Fuel Tax” that the current government introduced to pay for public transport development, of which none has started…… And then to top it all off there’s then 15% GST (same as VAT), on top, which is also charged on the excise portion! Yes, even our taxes are taxed!
If you have a diesel then you don’t pay at the pump (other than GST and the RFT in Auckland), but you have to pay “road user charges” which is charged by mileage according to the weight of the vehicle. So this give a very different pump price. On my petrol X-Trail it was over US$100 to fill every time, but in my Navara (diesel) it’s usually around the US$50 mark.Not that I care, as it’s paid for by the company.
Yes the NZ system has one gigantic flaw in it and that is the lowest diesel tax RUC road user charge is the 3 tonne rate thats what I pay for a 1499kg Citroen 5 door at $72 per 100kms its actuall more than the cost of the diesel it uses to go that far or it was untill I moved to Auckland I was paying 91c per litre I just filled up tiday at Gull in Wiri and got nailed $1.16 per litre and its 10c off day and the tax for all fuels and RUCs increased on July 1st the truck I drive is around $4.00 per kilometre in tax alone and being a V8 Scania it sucks fuel like theres no tomorow loaded right up to 48 tonne you can almost see the gauge moving going over the Bombay hill.at only 500hp its a little underpowered for the job.
Not mentioned specifically in the article, California adds sales tax on top of the excise taxed price. Sales tax is approximately ten percent, as it varies a bit by city and county.
In Australia, I initially calculated that I should be paid 47c a gallon each time I fill up, and was about to write a stern letter to my member of parliament asking for a refund of the difference, but then remembered my early failings with all things involving numbers – my pre-school report said, “We thought he was kidding” – and it has only gone downhill since that long-distant time.
In fact, our fuel costs, currently about $4.40 AUD (($3.15 USD) is made up by about $1.40 AUD , or a third, in tax. And, as it seems elsewhere, we add a 10% sales tax to each already-taxed tankful of fuel. Registration is a state issue, and is not cheap at $800 , BUT that does include a mandatory 3rd party insurance (injuries to people, self or others). Insurance to pay for property damage, yours or theirs, is your own private choice, and about 95% take some level of cover. Taxes mean that the overall cost of motoring is nowhere near as cheap as it is in the US.
We do have reasonable city public transport, reasonable-to-good roads, free health care, cheap-ish university (partial cost of going is approx 1/3 of total, deferred by govt till your income tax reaches certain level and then in increments), good wages, good health/safety conditions & enforcement, compulsory retirement fund contrib at employer’s cost of 10% of your wage (as well as govt old age pension), and universal access to aged care regardless of money.
So as a society, we get a decent level of return for high-ish fuel prices, not Euro levels of cradle-to-grave, but neither is the fuel cost as high. Purely personally, I’d be prepared to pay more for more: we are conditioned to those high-ish fuel prices such that most private purchases (as opposed to work-paid vehicles) are economical cars, and we’d adapt further again.
It’s really amusing to note that the way these taxes are levied are universally a complex mess. I guess it’s a necessary by-product of democracy, where practically no-one will be elected on the basis of raising taxes but where the collective expenditure need has to be met by all manner of messy additions and sneak-farts on a commodity that just about everyone has to in some way rely upon!
Great piece, Jason, and doubtless a lot of work.
Thanks for the informative article that wasn’t too taxing a read.
Tualatin, Oregon in Washington County does not have a Fred Meyer Gas Station (marsh lands prone to floods) so I usually fill up in Portland in Multnomah County even if it costs more due to convenience. It isn’t worth a 14 mile round trip to Wilsonville’s Fred Meyer Gas Station in Clackamas County or 23 mile round trip to Newberg’s in Yamhill County unless I can combine errands.
Glad to see someone recognizes the cost=per-mile of driving a car. I live in a typical American place (suburb) where any conversation doesn’t hardly get past “one gallon of gas, X cost divided by (say) twenty miles more of driving”.
(And that doesn’t even consider time.)
@ThresherK yea, no problem, I sometimes like to geek out over all the details. There is a decent hill between Tualatin and Newberg which uses more fuel so that is another factor against going to Newberg.
When I lived in North Portland the Hillsboro Winco was about as far away as the one near 102nd and Glisan, but to get to Hillsboro requires a bunch of climbing hills. The Vancouver Washington Winco was closer than either, but you have to cross the Columbia River and pay sales tax so definitely not worth it.
I was told at a retirement seminar that an ideal retirement location was living in Washington state very close to the Oregon border. Washington doesn’t have an income tax and Oregon doesn’t have a sales tax. But the weather is too depressing,
UK prices, analysed by the RAC. Excise duty and VAT (value added tax = a sales tax at 20%) total 67% of the retail price.
1 litre is .264 of a US gallon, so at 113.7p/litre, that’s £4.30/US gal/$5.50 per gallon.
But equally, this is often cheaper than historical values.
These prices and taxes are typical for Europe, but as Paul notes above, car usage (and size) has historically been very different to the US, as has the scope of tax funded services and at least in the UK the range and variations of taxes. Jason asked for no politics so I’ll say no more.
This always a contentious issue which has been addressed by establishing an inflation linked escalator, which then get suspended when economically (= “politically”) necessary.
I live in Norway, and we pay around 6,5-7 USD for a gallon of gas. 80% of it is taxes.
After WW2 nobody could buy a car (if you didn’t need one at your work, aka a doctor or something) before 1960. That is because we then needed the currency to rebuild our country after WW2.
Since then cars have been seen on as a luxury, even today. The taxes is used at a lot of public services like free health care, free education, social security if you loose your job (which is very uncommon in Norway) and so on.
But, we pay around 28% income tax, we pay road tax, and to a greater and greater extend, we have toll roads. We also pay 25% tax at everything we buy.
Norway is often seen as one of the richest countries in the world. And with my about average salary, I have no problems with owning a relatively big and new house (very big compared to an average British, German or southern Europe houses) in a fine neighborhood in an averqage size city. Everybody have 5 weeks of holiday by law ( we have at least 9 or 10 days with free from work/public holidays), we work 37,5 hour a week (like most people do in the west).
Most Norwegians travel around the world in their holidays, and when you compare daily life in other countries I have to say it looks like living in my country is very good.
But then, even with all that taxes and gas price, I have no problem to use my 1980 Eldorado as a daily driver if I want to do so.