Gas tax increase or vehicle miles traveled charge?


It is no secret that our transportation infrastructure in America needs some work. Even as our global competitors build more roads and advanced rails, we are struggling to retrofit our train tracks and fix all of the roads from our sprawling past.

In order to maintain our roads and highways, we have a system of user fees so that it can partially pay for itself – but it never reaches total self-sufficiency. According to the Federal Highway Administration’s most recent statistics, user fees cover 51.72 percent of highway funding. User fees are motor-fuel taxes, vehicle taxes and tolls.

As we have written several times in the past, the current federal gas tax has lost its purchasing power because it does not automatically adjust for inflation. It hasn’t been raised since 1993 – and I haven’t met a single person who will argue that the economy hasn’t changed in the last seventeen years.

The other problem with the gas tax is that as cars become more fuel-efficient, less gas is purchased, which means less money is available for infrastructure (two good things followed by a bad thing). This is causing many transportation officials and analysts to start thinking of new ways to raise the funds required to keep our nation moving. One proposal is a gas tax increase. Another proposal is an entirely new tax, which would be based on Vehicle Miles Traveled (VMT).

A VMT tax is fundamentally based on miles, but there are several different standards that can be factored into its calculation. For example, miles on 35W could be more costly than miles on Highway 60 though St. James. It could also be more costly to drive on 35W in rush hour than off-peak times, which is a form of congestion pricing.

As a How Stuff Works article points out, this type of tax can encourage people with flexible hours to change their driving habits, but it hurts people with non-flexible work hours – and that group is usually comprised of working class people with less means to pay for their commute.

Another problem with VMT is that a vehicle’s miles per gallon are not taken into account. That means that the electric car that traveled from Alaska to Argentina for less than $5 wouldn’t be able to repeat that trip with VMT taxes.

Of course, every added complexity to the tax requires technology to track it – and therein lies the primary concern. Calculating VMT would require a device in your vehicle which could track where and when you drive. We have the necessary technology, but privacy concerns are significant, as evidenced by an article about it in the New York Times.

Both gas taxes and VMT taxes have their problems, but it is clear that we need to change our current system. The National Commission on Fiscal Responsibility and Reform has just released a report which, among other things, calls for a 15 cent federal gas tax increase between 2013 and 2015. Since VMT probably has fierce debates in its future, the gas tax should be increased now to catch up to the effectiveness it was originally meant to have. Our infrastructure is too important to wait any longer.