BACKGROUND

 

Revenue Collection

The Internal Revenue Service (IRS) collects Federal fuel taxes from large oil companies or large oil distribution firms with storage facilities prior to distribution of the fuels to customers. The Federal fuel taxes are imposed when the fuel is first removed from bulk storage and sold. Although these taxes are "passed on" to the individual purchaser, data at the individual purchaser level are simply not available.

Additional Federal heavy vehicle non-fuel-based fees include (1) the retail sales excise tax on tractors and trailers, (2) the tax on heavy vehicle tire sales, and (3) the heavy vehicle-use tax. Truck registration was once used as a proxy for truck taxes, but was rejected because it did not accurately reflect on-highway usage in a particular State. In fact, the State where the heavy vehicle and/or tires are purchased is not necessarily the State in which these purchases will be used.

The process for collecting Federal motor fuel taxes and user fees, issuing credits, and certifying receipts is shown in the flow chart below. This process involves four organizations within the Treasury Department. The final information from Treasury, which documents receipts for the previous fiscal year, determines the overall level of highway user tax receipts attributed to the Highway Trust Fund by tax type. This amount represents the total highway program funds available for apportionment to the States. In addition, the revenue by tax type is used in the distribution of funds for specific programs; for example, on-highway diesel usage is a factor in the formula for the NHS program.

A basic graph showing the highway tax revenue process flow from large oil companis and owners of heavy vehicles to the U.S. Department of Treasury

Federal tax rates for each of the highway fuels and other highway user fees and the distribution of these tax revenues into the Highway Trust Fund or other accounts are provided in Appendix D of this report (reproduced from Table FE-21B from Highway Statistics). The Federal motor fuel taxes make up about 85% of the HTF's receipts. The following table shows actual net Highway Account revenues for 2000 by the fuel or fee category.

 
ACTUAL NET HIGHWAY ACCOUNT REVENUES FOR 2000

Free Category

Amount ($ billions)
% of Total

  Gasoline

$17,579
58

  Gasohol

1,093
4

  Diesel and Special Fuels

6,991
23

Subtotal - All Motor Fuels

25,663
85

  Truck and Trailer Sales

3,321
11

  Truck Tires

442
1

  Heavy Vehicle Use

921
3

Subtotal - All Truck Related Taxes

4,684
15

Total

$30,347
 

Source: U. S. Department of Transportation, Highway Statistics 2000, Table FE-9.

 

 

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