Indiana News

State Seeks Alternatives to Fuel Tax

Chamber backs pilot program to tax vehicles for miles traveled instead

12/26/2013

Legislators are looking for ways to offset declining fuel tax collections, perhaps by instead taxing how far you drive.

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Fuel taxes are the backbone of state highway funding, but better fuel efficiency and the rise of electric cars and hybrids are reducing what the state collects. The Indiana Chamber wants to experiment with taxing you based on how many miles you drive and the weight of your vehicle.

President Kevin Brinegar envisions a voluntary pilot program, perhaps with an income tax credit to recoup the taxes participants pay at the pump. He says gas taxes were originally designed as a stand-in for the wear and tear individuals cause to the roads. Decreased gasoline usage by hybrids or natural-gas-powered vehicles means those cars aren't paying their fair share.

Brinegar says any new tax system needs to restore that balance without penalizing hybrid owners.

Indiana Motor Truck Association president Gary Langston contends other states which have tried a mileage tax have had trouble calculating it accurately. He says if the state needs more highway funding, it should raise the fuel tax.

A legislative study committee reviewed the issue this summer and recommended a more in-depth study next year.

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