U.S. gas tax needs hike, overhaul: commission

Record high fuel prices and an economic slowdown caused sharp declines in driving by Americans in fiscal 2008, lowering the revenue collected for the fund, but federal highway spending rose $2 billion. The Highway Trust Fund took in $31 billion between October 2007 and September 2008, $3 billion less than the prior year.

As vehicles become more fuel-efficient, Americans will be able to drive more miles as they pay less in fuel taxes, making a highway maintenance system that depends on gasoline taxes unsustainable, said Adrian Moore, vice president at the Reason Foundation and a member of the commission.

Moore does not support raising fuel taxes, but said it is the only tool Congress can immediately implement.

"The gas tax is broken, so any increase in gas tax is just a Band-Aid. It gets you through a very short term. It doesn't even remotely solve the problem," Moore said.

Moore and Atkinson said America must shift to a system whereby Americans pay for the number of miles they drive instead of being taxed per gallon of gasoline. Under such a system people would pay more for driving in some areas such as heavily congested freeways and less in areas such as rural highways.

Americans pay an 18.4 cent federal tax on each gallon of gasoline they buy, plus an extra 29 cents on average in combined state and local taxes.

(Reporting by Ayesha Rascoe, additional reporting by Roberta Rampton; editing by Richard Chang)