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Lawmakers in Illinois are proposing scrapping the state gas tax, taxing motorists for each mile they drive instead.

Illinois needs to find $43 billion over the next 10 years to fix crumbling roads and bridges, but more fuel-efficient cars are decreasing the amount of revenue going into the state's gas tax despite more miles travelled.

"We have a fiscal crisis in the state but we also have a physical crisis," said Jim Reilly, who works for the Metropolitan Planning Council, while testifying recently at an Illinois Senate committee, according to the Daily Herald. "Long term, because of fuel efficiency and electric cars … we can't just depend on the gas tax, as it's been.

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"If the Illinois infrastructure, particularly the transportation infrastructure falls apart, our economy depends on that."

Americans pay a federal excise tax on gasoline of 18.4 cents/gallon and Illinois charges a motor fuel tax of 19 cents/gallon plus an environmental tax of 1.1 cents/gallon. Illinois is also one of only seven states to charge a sales tax on gas. It adds 6.25 per cent to the price or about 20 cents per gallon.

The discussion to charge drivers based on miles revolves around a plan by Senate President John Cullerton to charge 1.5 cents for every mile driven.

Drivers would have three options:

  • A device enabled with geo-location technology could track mileage driven on public roads in the state.
  • Drivers could pay based on the car odometer reading, but this would also include out-of-state mileage.
  • Drivers concerned about privacy can pay a flat annual fee of $450, the equivalent of driving 30,000 miles.

By comparison, the Federation of Canadian Municipalities has estimated Canada's municipal infrastructure deficit at $123 billion and growing $2 billion annually, including a $21.7 billion transportation infrastructure deficit. However, there is no talk about changing the system in Canada.

The Ontario Ministry of Finance doesn't speculate on tax policy, but a similar plan isn't being considered in Ontario or at the federal level because neither have a problem of falling revenues.

Federal and provincial governments collected $22.4 billion in fuel taxes in 2014.

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Currently, Canadians pay about 30 per cent more at the pump in taxes. It includes 10 cents/litre as the federal excise tax and at least 5 per cent GST/HST. In cities like Vancouver, drivers also pay a 17 cents/litre transit tax and a 6.67 cents/litre carbon tax. The provincial fuel tax varies from 6.2 cents/litre in Yukon to 19.2 cents/litre in Quebec. It is 14.7 cents/litre in Ontario on top of the 13 per cent HST.

That 14.7 cents/litre in Ontario is a number that hasn't risen since 1992, although the Ontario Ministry of Finance says the revenue is increasing from $2.3 billion in 2013-2014 to a projected $2.5 billion in 2016-2017. However, the tax on aviation fuel is increasing.

The Federal excise tax – 10 cents/litre – goes into general revenues and doesn't directly fund repairs for roads and bridges.

The money to fix infrastructure comes from the federal Gas Tax Fund, which was created in 2005 to provide municipalities with $1 billion per year. Since then it has doubled to $2 billion per year and is "legislated as a permanent source of federal infrastructure funding for municipalities," according to Infrastructure Canada.

"Despite the name of the program, funding for the federal Gas Tax Fund is not actually sourced from the federal gas tax," says Jen Powroz, a media relations officer for Infrastructure Canada. Meaning the fund won't shrink because of more fuel-efficient vehicles.

Illinois is not the first state to float this idea. Oregon introduced the optional plan last year. Drivers pay for mileage and receive a fuel tax credit through an app.

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"It's a way we can all give back to make sure our roads are there ready to take us on our next adventure," a friendly female voice says in a promotional video.

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