Federal Highway Commission Urges Diesel and Gas Tax Hikes, Mileage Fees
By John O'Dell February 26, 2009New Revenue Source Needed To Keep Highway System Working, Panel Says
Despite the Obama administration's unequivocal rejection
of the idea, a federal transportation pane tasked with figuring out how to finance future highway construction and repairs is calling for institution of a vehicle mileage tax that would have drivers pay for each mile driven.
The National Surface Transportation Financing Commission also said in its final report, issued this morning, that the nation needs an immediate but temporary increase in federal fuel taxes, now 18.4 cents a gallon for gasoline and 24.4 cents a gallon for diesel fuel.
As the economy has tanked and fuel prices have risen, people are driving less and shifting from fuel-guzzling pickup trucks and SUVs to more efficient small cars and crossovers.
The result has been a dramatic decline of the fuel taxes that provide federal highway revenue. The highway fund last year sought, and obtained, an $8 billion infusion from Congress to remain solvent.
A mileage tax, the panel said, would replace the declining gas tax revenue that is supposed to cover the federal government's share of highway and bridge construction and maintenance costs.
The panel is suggesting an average fee of 2 cents a mile, which means a motorist driving 15,000 miles a year would pay $300, regardless of the type of vehicle driven.
Today's gas-tax funding system means motorists pay varying rates depending on their vehicles' fuel economy but almost always are paying far less than the charge the proposed mileage tax would levy.
The driver of a Prius that averaged 48 miles a gallon for 15,000 miles would pay just $57.50 in federal gas taxes, while the driver of a 16 mpg Chevrolet Tahoe would pay $172.50.
The funding commission also is urging a temporary 10-cent a gallon hike in the federal gas tax and a 15-cents a gallon hike in the diesel tax.
The tax boosts would generate an estimated $20 billion annually, enough to enable current spending levels to continue but not enough to close the gap between needs and income, the report says.
"With the expected shift to more fuel-efficient vehicles, it will be increasingly difficult to rely on the gas tax to raise the funds needed to improve, let alone maintain, our nation's surface transportation infrastructure," Robert Atkinson, president of the nonpartisan Information Technology and Innovation Foundation and chairman of the congressionally appointed highway financing commission, told E&E News, a subscription-only environmental news service.
The White House has opposed both a fuel tax hike - at least now, in the midst of a ferocious recession - and a mileage tax.
Atkinson told E&E News that while the present political climate may not favor the suggested increases, the committee wanted to begin debate on the ideas for possible future action.
In the interim, he said, the highway funding reauthorization bill that will set financing strategy for the next six years should include funds for tax policy research and public education to make motorists more aware of how their fuel taxes are spent and what is needed to keep traffic flowing on the nation's highway system.
Our two-cents worth is that money for highway upkeep and improvement does need to be raised and spent, but the taxing scheme should not be one that removes incentives for people to continue demanding more fuel-efficient vehicles.
A miles-traveled tax would do just that - effectively penalizing fuel efficiency - unless all sorts of adjustments are built in to account for vehicle weight and fuel consumption.
John O'Dell, Senior Editor
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Let the raising of taxes begin! After all, bad government policies led to this debacle, so why shouldn't American taxpayers and American drivers pay the price?
I think "penalizing" is too strong of a word, since (to use your example) the driver of the Tahoe uses more gas -- and thus pays more in fuel costs anyway, regardless of tax -- than the driver of a Prius. The planned tax just removes an additional incentive to buy a more fuel efficient vehicle. Will this prompt people to buy pickup trucks and SUVs again? Probably not. But will it encourage people to drive less? Certainly. And from that perspective this is a "green" policy.
The problem I have is that this is a less effective means of raising tax dollars than either (a) an increased gas tax or (b) more widespread tollways, both of which are used effectively throughout the country. There is no need to track the mileage of every single vehicle in the US, which would be a monumental undertaking. And if they're worried about millions of electric vehicles taking to the roads without using gas, they can just raise energy taxes. So there are plenty of ways to squeeze money from cash-strapped drivers without having to resort to inventing new taxes.
"With the expected shift to more fuel-efficient vehicles, it will be increasingly difficult to rely on the gas tax to raise the funds needed to improve, let alone maintain, our nation's surface transportation infrastructure."
Uhhmmm... what shift? Without the proposed increase in gas tax, there is no additional economic incentive for consumers to buy and drive more fuel-efficient vehicles. Consumers will continue to drive what they?re currently driving.
A mileage tax that treats all vehicles equally is just stupid. Heavier vehicles create greater wear-and-tear on the infrastructure and should be charged more per-mile. Is that so hard to understand? I guess the lawmakers were just too lazy to do the hard part, which is to develop a fair scheme of charging taxes where taxes are due. The flat fee also misses a huge opportunity to drive consumer demand toward smaller vehicles that use less fuel -- or no fuel at all. This, at a time when our politicians are beating the fuel-efficiency drum to *appear* as green as possible.
If the gas tax revenue is in proportion to fuel consumption, then the mileage tax revenue should be in proportion to a vehicle?s curb weight. Now we've covered both bases -- the air and the infrastructure. The mileage tax would also provide revenue from an appropriate source if electric vehicles become a major constituent on our nation's highways.
[greenpony]"..if they're worried about millions of electric vehicles taking to the roads without using gas, they can just raise energy taxes." You?re joking, right? So, all the city dwellers that don?t own cars, ride their bikes, and take mass transit should pay through the roof to heat their apartments, and keep the soy milk cold. All because our government couldn't figure out a better way to tax where taxing is due. Talk about your "bad government policies".
I also feel that tollways are not the solution. They're disruptive to my commute, they're ugly, and they require a whole separate infrastructure (tollbooths and attendants) to collect the revenue. I'd rather bring my car into the already-existing gas station + smog shop down the street once a year to report my mileage, than fret about having cash in my pocket every time I leave my driveway. In CA, some of those annual reports are already taken care of by periodic (every 4 years) smog checks. Penalty for not reporting your annual mileage? Somewhere well north of the average pay-out.
caroftheweek: I WAS joking, but about the millions of electric vehicles. I don't see electric vehicles being a viable alternative to fossil fuel powered vehicles at any point in the next 20 years. Take the comment about raising energy taxes as a tongue in cheek poke at our current economic and energy situations.
Tollways are not disruptive unless you have the archaeic technology of tollbooths. They do not require cash on hand, although that can be a method of payment if you so choose. Ugly is a matter of opinion, as the tollways I drive on are unobtrusive. And the whole separate infrastructure is already in place in many parts of the country; do you think a separate infrastructure is not needed to report mileage? Who decides how often mileage is reported? Who decides how inconvenient it's going to be? Who decides what exemptions there will be? Who decides how to handle foreign vehicles? Can we trust them to make decisions that won't make it impossible for some people?
Bigger government and more regulation is not the answer. The government is targeting the automobile because it's perhaps the most visible pollutant, and targeting CO2 because everything else has been reduced to near-zero emissions anyway. If anything, if they would've done their paretos right, they should be taking a closer look at industrial polluters like cement factories and power plants: reducing their pollution will yield much more bang for the buck than squeezing the automakers even more. They should also reconsider that "global warming" might not be due to human activity at all. It's arrogant to assume that humans have such a sudden and lasting impact on climate, when all the climate records indicate that the world has been significantly warmer in past eons. And do you know what accompanied warmer temperatures? Increased biomass. So is the government saying that stifling life is the stance we're taking? Because that's what it looks like from here.
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