Alternative Approaches to Funding Highways

In Alternative Approaches to Funding Highways, the Congressional Budget Office (CBO) analyzes the effects of alternative approaches to funding highways. In particular, it compares the effects of current fuel taxes and of possible new taxes on the number of miles highway users drive. Some costs of highway use, such as those associated with emissions of greenhouse gases and the nation’s dependence on foreign oil, are directly related to fuel consumption. But the larger share of costs—for pavement damage, congestion, accidents, and noise—is more directly tied to the number of miles traveled. Therefore, having users pay the actual cost of their highway use would involve imposing a combination of fuel taxes and per-mile charges. Although such an approach would lead to more efficient use of highways, it would distribute the burden of highway funding somewhat differently than would fuel taxes alone. In keeping with CBO’s mandate to provide objective, impartial analysis, this study does not make any recommendations.