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Gas Tax Revenue to Decline as Traffic Drops 38 Percent

Gas Tax Revenue to Decline as Traffic Drops 38 Percent

Tax Foundation
March 31, 2020
Ulrik Boesen

The coronavirus pandemic is affecting most aspects of the economy, and motor fuel consumption is no exception. As social distancing recommendations, shelter-in-place-orders, and quarantines have upended American life in an effort to slow the spread of the virus, road traffic has declined dramatically around the country.

While the mitigation policies will be felt across most tax categories including excise taxes, income taxes, and sales taxes, a key consequence of millions of people staying at home is fewer cars on the roads. Fewer people driving means fewer people buying gasoline, which may have positive effects on air pollution but could be detrimental to motor fuel excise tax revenue for federal and state governments.

According to INRIX, a traffic data analytics company, compared to the week of February 22, just before the pandemic was officially called, personal travel nationwide for the week of March 23 had decreased by 44 percent. Even compared to the week before the March 23 week, there had been a 20 percent decrease. Trucking is also down, but not to the same degree, as businesses (especially retail stores and pharmacies) still need inventory. Long haul trucking is down 3 percent whereas local trucking operations are down 14 percent. The overall decline in road traffic is 38 percent. Such a decline will lead to a dramatic decline in gas tax revenue... FULL ARTICLE

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