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Figure 4. Points Served by Regularly Scheduled
Intercity Bus Service, 1968-1993

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Note: Data for 1968, 1977, 1982, 1986 and 1991 are from the U.S. General Accounting Office. The 1993 figure is from the American Bus Association.

4. Fuel Tax Impact

To reduce the federal budget deficit, the excise tax on diesel fuel was increased 4.3-cents per gallon from 20.1 to 24.4-cents per gallon beginning October 1, 1993. Although the tax was applied to all users, failure to extend the bus industry's existing fuel tax exemption made the current unfair distribution of federal subsidies to competing modes of intercity passenger transportation even more inequitable. Intercity buses now pay 7.4 cents of the 24.4 cents per gallon diesel fuel tax. Amtrak. however, in addition to its other subsidies, pays a diesel fuel tax of only 6.9 cents per gallon. And mass transit buses are totally exempt from the diesel fuel tax. If this already uneven playing field is made worse, the impact on the bus industry and those it serves would be devastating.

Based on 1993 bus operating statistics, every 5-cent increase in the diesel fuel tax rate will cost the intercity bus industry $8.6 million. In 1993, total intercity bus fuel consumption equaled 172.2 million gallons. Hence, every 5-cent increase in the tax rate will cost the industry $8.6 million. The intercity bus industry's annual tax cost of every 5-cent increase in the diesel fuel tax rate represents 29 percent of its modest 1993 federal subsidy of $30.0 million and one-fifth of its 1993 net operating income of $42.9 million.' Any rate increase greater than 15 cents per gallon would impose a tax cost on the industry that would exceed its current modest federal subsidy (Figure 5).

Any increase in motor fuel taxes paid by the intercity bus will exacerbate the subsidy-based disadvantage facing the industry and hasten the erosion of the intercity bus passenger transportation network. Bus operators compete primarily on the basis of price. Serving mostly lower income families, little if any opportunity exists to pass cost increases on to their customers. Instead, the cost must be absorbed by the operator. As a result, when costs go up, marginally profitable service is abandoned. Usually, the impact is greatest in rural communities and small towns. Those with few, if any, transportation alternatives bear the biggest burden.

Net operating income of 10 of the nation's largest intercity bus companies (Greyhound Lines. Inc. and nine regional companies) that together account for 90 percent of total revenues generated by Class I intercity bus companies. See the Interstate Commerce Commission's release "icc news." Monday, April 19, 1994, No. 94-90. Washington, D.C.

Figure 5. Intercity Bus Industry Subsidy,

Net Operating Income, and Tax Cost

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Source: Nathan Associates Inc.


Table A-1. Total Federal Subsidies, Net of User Fees, to Passenger
Transportation Systems and Modes, 1960-1993

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Note: Items may not sum to totals due to independent rounding.

a. Negative entries represent collection of user fees in excess of cost responsibility, an addition to the highway trust fund balance.

b. Total is sum of subsidies. Negative amount for auto is a subsidy of zero.

Source: Nathan Associates Inc. See Tables A-4 through A-13.

Table A-2. Total Federal Subsidies Per Passenger Trip,
Net of User Fees, to Passenger Transportation
Systems and Modes, 1960-1993

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Note: A round trip by one person counts as two passenger trips. General aviation and auto travel passenger trip data are not available.

a. Amtrak only

b. Preliminary.

Sources: Eno Transportation Foundation, Inc.. "Transportation in America,"

Tenth Edition. 1992. Twelfth Edition. 1994. American Public Transit Association, "Transit Fact Book, 1995, 1992. 1988. and 1980 editions

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