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Auto Industry Generating $135 bil in Annual Taxes

“A massive economic driver.”

by on Apr.11, 2012

It's that time of year, again.

Before fretting over the check you might have to write Uncle Sam in the coming days consider the hefty tax payout the auto industry makes each year – about $135 billion annually, according to a new study by the Center for Automotive Research.

In fact, the industry generates about 13% of all state tax revenues, according to the CAR study which was commissioned by the trade group the Alliance of Automobile Manufacturers, or AAM.

If anything, “As economic conditions continue to improve, auto companies could see an increase in sales and employment that would generate additional state and federal tax revenues,” said Kim Hill, director of the Sustainability and Economic Development Strategies group at CAR and the study’s lead researcher.

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About $43 billion of those taxes go to the U.S. Treasury — $14 billion in the form of income taxes and another $29 billion from federal motor fuel taxes.

The study found that $91.5 billion went into various state coffers, equaling about 13% of what the 50 states take in from taxes.  Of that, $30 billion comes from taxes and fees on the sale and service of automobiles – half of that from new vehicle sales.  The rest, more than $60 billion, is generated from state fuel taxes, licensing and registration fees, according to CAR.


Pay By the Mile?

But efforts to shift to pay-as-you-drive model slow to catch on.

by on Aug.12, 2011

Might you someday pay by the mile?

It took Carol Hinka some time to get used to paying tolls when she moved to Central New Jersey two years ago, first on the Garden State Parkway, then the NJ Turnpike on her daily commute to her office just west of New York City.

But when she learned her insurance company was experimenting with the idea of charging by the mile – much the way the toll roads base their fees – she began to wonder why she couldn’t pay by the mile for all of her automotive expenses, rather than the current hodgepodge that includes fixed state and federal fuel taxes.

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Hinka isn’t alone.  A number of regulators and planners think the idea of charging by the mile is a great idea – something that could gain even more traction if electric propulsion grows in popularity.  Since hybrids use less fuel than comparable conventionally-powered vehicles and battery-electric vehicles use no fuel at all, there’s the potential for government coffers to lose billions of dollars a year in annual revenues used for road maintenance and other projects.

To replace those revenues, several states – along with a number of European countries – are exploring the idea of establishing per-mile fees that would use GPS navigation systems to track how much a vehicle is driven.  There could be a fixed rate charge or the fee might be adjusted to reflect the fuel-efficiency of a vehicle, perhaps even when and where it was driven.