Ethanol tax leakage

ARTBA the roadbuilders group estimates that tax breaks for ethanol are costing the US govt $1.1b/yr, and that a motorist driving a car fueled with a 90/10 gasoline/ethanol mix called gasohol pays the equivalent to 10c/gal vs 18.3c paid by motorists using regular gasoline. The ethanol subsidy is a farm lobby lurk but it was enacted with claims that gasohol is somehow superior environmentally to regular gasoline. The science doesn’t seem to bear that out. It burns cleaner in some respects but dirtier in others. Rather like diesel vs CNG, which the Health Effects Institute, suggests makes it a wash.

But the push for cleaner and more efficient fuels seems bound to continue to erode the fuel tax yield. In the past few years, in the name of ‘innovative finance’ a great deal of future gas tax revenues have been mortgaged against ‘grant anticipation’ bonds, meaning in the near-future they will be used to service debt on past roads, and not be available for present roads. Regular gas tax road funding has also been supplemented many places with sales taxes and license and registration fee increases. If political resistance to these grows there could be more reliance on tolls.