Congress Gets Highway Funding Commission's Pitch for Pay-Per-Mile Driving Tax
By John O'Dell March 18, 2009Few motorists would dispute the National Surface Transportation Policy and Revenue Study Commission's claim that the cost of traffic congestion - in wasted time, wasted fuel and vehicle wear and tear - is tremendous.
The commission estimates the cost at more than $78 billion annually and Chairman Robert D. Atkinson on Tuesday told members of the House Budget Committee that it is getting worse.
The federal Highway Trust Fund's average annual revenue is falling woefully short of the $100 billion needed to keep pace with repairs and increasing traffic, he said.
Atkinson's testimony summarized findings in the Feb. 26 transportation funding commission report that bluntly stated: "The federal Highway Trust Fund faces a near-term insolvency crisis, exacerbated by recent reductions in federal motor fuel tax revenues and truck-related user fee receipts."
But we disagree, as we have in the past, with the commission's proposed solution to funding decline - a so-called vehicle mileage tax, or VMT, that would have motorists pay per mile driven.
The federal funding formula historically has relied upon taxes imposed on petroleum-derived fuels, and, by contributing mightily to the cost of gasoline and diesel fuel, those taxes provided an incentive for people to demand fuel-efficient vehicles.
A straight miles-traveled tax that replaces fuel taxes could kill consumer demand for green vehicles: the driver of a Hummer would pay the same as the driver of a Prius to travel from, say, Boston to New York.
Ironically, the highway commission links the funding shortfall to "the growing drive for greater fuel efficiency, alternative fuels and new vehicle technology."
The blue-ribbon panel maintains that it searched for "safe, effective, fair and sustainable" alternatives to the fuel tax. It acknowledged that its proposed solution would force "inherent and unavoidable trade-offs among those principles, which require some subjective balancing among them."
We've got nothing against "safe, effective, fair and sustainable." But we believe a fifth guiding principle needs to be added - "sensible."
The suggested VMT would be based "more directly upon miles driven (and potentially on factors such as time of day, type of road, vehicle weight and fuel economy) rather than indirectly on fuel consumed," according to the report.
What scares us is the word "potentially" and the fact that all the things that could make the tax more equitable for people who are trying to drive cleaner, greener vehicles, are in parenthesis.
Many hybrid vehicles, for example, weigh more than their non-hybrid counterparts. But it would be counterproductive to penalize a fuel-efficient car for incorporating heavy battery packs, gearboxes and auxiliary power sources that dramatically boost fuel efficiency while cutting tailpipe emissions.
And, what would happen to the green vehicle market if fuel economy ends up being ignored when the final per-mile funding formula is set?
The commission correctly understands that market forces - like the tax breaks that are designed to steer more motorists into green vehicles - can help to change consumer habits. That's evident in the suggestion that the per-mile tax could be reduced for motorists who drive during less-congested times of the day and night.
E&E Daily, a subscription-only environmental and energy news service, reported Tuesday that Atkinson's pitch "was met by a lukewarm reception from the panel, with many members appearing to balk at the idea of increasing any tax during the ongoing recession."
But the news service added that that "the panel spent the bulk of the hearing peppering Atkinson and other transportation experts with questions about how such a scheme would work."
The commission acknowledges that it would take at least until 2020 to secure the money and technology needed to institute the proposed tax. Atkinson on Tuesday suggested that vehicles would be outfitted with onboard devices that would track mileage, time of day and other data, and then tally the appropriate tax to be paid when motorists stop to fill their tanks.
Until that system is in place, the commission's near-term solution would be to increase current federal fuel taxes and other existing revenue sources.
That interim solution would seem to more than the VMT solution to advance two of the country's necessary goals - generating more money for the Highway Trust Fund while giving consumers a solid reason to consider buying green vehicles that are more fuel-efficient and emit less pollution.
Greg Johnson, Contributor
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No, the decrease in revenue is mostly due to people not driving as much, because for the first time in nearly thirty years Americans are driving less than they did the previous year. When the keepers of the highway trust fund have planned on 1-3% increases, and instead they see 3% decreases, that's a hit to their pocketbook. It's the exact same way with a business -- if expected revenues decrease, coffers are depleted. Unfortunately for the business, they can't just raise taxes. And unfortunately for Joe Citizen, our authoritarian government can.
The idea of tracking individual vehicles' mileage is ridiculous. First off, implementing the plan will be exhorbitantly expensive. GPS transceivers in everybody's cars? Who is going to pay for that? Setting up communications with gas stations or inspection centers or whatever is also going to cost a lot of money, and who will pay for that? If older cars need to be retrofit, that's going to add cost too. Who will pay for that? Second, what about the GPS satellites, how much data can they transfer? Nobody thinks about overutilizing them. Third, while intimating that the cost of travel for a Hummer and a Prius are the same is false, I do agree that a straight mileage tax offers less incentive to buy fuel efficient vehicles. Fourth, making a convoluted tax with all sorts of exceptions and special rules for different types of vehicles is a waste of time and resources when the dodos in Washington could be concentrating on bogger issues. Fifth, why is there such strong oppsition to simply increasing the gas tax? I mean, seriously, they have to waste all this time developing an entirely new way to tax you and me, when the simple and easy solution will (a) get them needed money immediately and (b) not require an ounce more effort than amending the current gas tax legislation. Just raise the damn gas tax if you need to!
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