One of the big factors propelling ethanol production is a significant difference in the retail taxing. America has traditionally paid for roads by taxing fuel. What if GPS technology allowed us to pay by mile instead?
Americans are driving cars that get better mileage, and more are driving vehicles that use fuels taxed at lower rates than gasoline, such as ethanol, or making their own fuel and not being taxed. That means gas tax revenue isn't growing nearly as fast as the number of miles driven.
In addition, the costs of road construction materials have skyrocketed because of heavy demand from India and China. Congress and many state legislatures are reluctant to increase gas taxes, especially at a time of high prices at the pump. The federal gas tax of 18.4 cents a gallon has not been increased since 1993; 24 states have not raised their gas taxes since 1997, according to the American Road & Transportation Builders Association.
That has made a mileage fee more attractive to some agencies. The University of Iowa study is funded by the Federal Highway Administration and 15 state departments of transportation. [More]
How do you get a special tax incentive for ethanol with that kind of tax structure?
Answer: Levy both taxes.
You heard it here first.