The state’s primary source of revenue for transportation infrastructure comes from motor fuel. Often referred to as the “gas tax,” the state charges a $0.28 user fee on each gallon of motor fuel (gasoline and diesel) purchased and an additional $0.0075 per gallon inspection fee.
The state’s fuel tax is included in the retail price paid at the pump. While the prices of gasoline and diesel can fluctuate frequently, the tax remains the same (28.75 cents per gallon) regardless of price.
South Carolina’s revenue trajectory changed with the passage of the road funding bill (Act 40) in 2017, which included an increase in the fuel tax of 12 cents, phased in at two cents per year over six years (2017 – 2022). As you can see, this legislation has been the sole driver of the increase in revenues for the state.
Motor fuel user fees allow residents and out-of-state drivers to contribute to the system. Historically, these fees have long been the most effective and efficient way to fund transportation infrastructure because they are based on the notion that the more you drive and the heavier your vehicle, the more you pay. However, this is not necessarily the case anymore.
A lot has changed over the years with ongoing improvements in fuel economy and the growing popularity of a new generation of vehicles powered solely by electricity.
Since 2022, South Carolina’s motor fuel revenues have flattened and are not keeping pace with population growth and inflation.
SCFOR encourages lawmakers to evaluate the buying power of our revenue sources and the relevance of the policies governing our infrastructure to ensure our transportation network continues to deliver for the people and businesses who rely upon it daily.