Are We Ready for a New Kind of Gas Tax?

On Public Policy Day at the D.C. Auto Show this year, we got wind of some dire news. The Federal Highway Trust Fund is slowly depleting because gas taxes have not been raised in 17 years.

While the federal gas tax has remained constant, the spending power of the 18 cents a gallon used for transportation improvements has decreased due to inflation.

While many business people support raising gas taxes, most also know it would be akin to political suicide. However, the country needs a serious transportation infrastructure facelift. Are we ready for a new kind of gas tax?

Reduced highway & transit funding, Jack Basso, AASHTO - 2010 DC Auto Show, Public Policy Day

Reduced highway & transit funding, Jack Basso, AASHTO - 2010 DC Auto Show, Public Policy Day

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gas Prices

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That was the question posed by Jack Basso of the American Association of State Highway and Transportation Officials. He noted that the U.S. is currently investing only about 40% of what the country should be spending on improvements to our transportation system.

To be able to accommodate the mobility demands of the public, he said, we would need a total $545 billion investment over the next five years. Worse, as cars meet higher gas-mileage standards, they will use less fuel and consequently, pay less in gasoline tax.

So, what's the solution? Basso suggested that one option would be a Vehicle Miles Traveled (VMT) tax. Long discussed in transportation policy circles, VMT taxes are now starting to appear in countries like the Netherlands.

Basso gave few specific details about how a VMT tax might be implemented in the U.S., but he noted a VMT tax has several long-term advantages over a standard gas tax.

FIrst, it avoids the gas-tax political impasse (though a VMT would undoubtedly spark its own political controversy). Second, it give the government a way to collect funds from vehicles that rely on energy sources other than gasoline (like plug-in vehicles).

Of course, many issues would need to be figured out for a VMT tax to be implemented. Will the tax be per vehicle, or per driver? How often will VMT be computed? How will it be verified? And, the most striking question of all, at what price will the VMT tax be set?

While many taxpayers might have hoped that using less petroleum would translate into lower taxes, a VMT tax would at least treat all vehicles--whether they use gasoline or not--equally.

Perhaps this is only fair, since miles driven is a better approximation of the wear and tear imposed by using roads than is the number of gallons of gasoline consumed.

It also begins to settle some early fears that the use of plug-in vehicles (such as the Nissan Leaf or Chevy Volt) may lead to less funding for highway improvements.

This policy conversation is just starting and I suspect that it will get heated fairly quickly. It also has me wondering about other alternatives for transportation funding.

Give us your thoughts and ideas in the Comments section, below.

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Comments (5)
  1. Vehicle weight and climate details matter more to road wear and tear.
    How about some actual analysis on this topic?

  2. Thanks for that info, Truth. How would you suggest incorporating vehicle weight into a VMT tax? And, are you suggesting that hotter or colder climates should have a variable VMT tax as well? Again, this is just the beginning of conversations like this here in the US, so it is interesting to see what other factors should be taken into consideration.

  3. I don't have a problem with a tax-by-the-mile concept as long as:
    1. The original federal gas tax is removed.
    2. The measurement is not done via GPS.
    For 1, I understand gov'ts need to adjust the way we are taxed for the higher mileage today's vehicles are getting and alternatively fueled/powered vehicles. And I don't like the idea that electrics, PHEVs, and HEVs can get out of paying taxes yet still use the roads as much as others that have standard ICE vehicles. But I don't think this should be an additional tax. It should be an alternate method to gas-tax.
    For 2, having GPS tracking of mileage has privacy issues that really scare me. What if you just happened to be in an area about the time a crime is being committed? Your GPS could wrongfully incriminate you when you were innocent forcing you to prove your innocence, not requiring them to prove your guilt. Now do I think it would come to this if we were forced into using GPS tax tracking? Not immediately, but just the potential is more than a little disturbing. Not to mention the cost of outfitting everybody's vehicle with a GPS seems cost prohibitive. Dashboard Odometer tracking is good enough since it is not nearly as easy to disable those kinds of controls on modern vehicles. That could be part of the emissions certification, to record your vehicle's odometer reading.

  4. Why not instead of taking yet more money away from the public when we're already taxed ridiculously to start with, we build roads that last? Too many roads are made from asphalt which doesn't survive more than 3 or 4 years in the best of conditions. Even concrete roads only last so long. People all around seem so worried about carbon in the atmosphere. Capture the output of power plants burning coal or other fossil fuels, then build new, carbon based building materials. There have been pilot projects of using alternative plastic and fiber based roads that are held together by resins that are embedded within the road to repair cracks and splits as they might form. This is technology that has been under test for years. If we're serious about wanting roads in good shape, let's quit building roads out of materials that don't "heal" themselves under stress. While I am a fan of electric propulsion and combustion propulsion, I can see readily that the future is moving toward all electric. So let's do away with these notions of yet more taxes, or taxing people by use, etc. Get to the heart of the problem which is letting the technology of roads stay where it was a decade after the car was invented.

  5. "The freeze-thaw cycle is a road’s worst enemy."
    This article and Jack Basso are barking up the wrong tree, according to Basso's own group, the AASHTO. Doesn't he read his own studies?
    "The weight that heavy trucks carry causes more damage to the highways than automobiles. National and state studies suggest that costs associated with the design, construction and maintenance are greater for heavy trucks than for automobiles. The American Association of State Highway and Transportation Officials' (AASHTO) Road Test Study found that the cost responsibility related to axle weight increases at a gradual rate up to 10,000 pounds and rapidly increases above 16,000 pounds. It also concluded that pavement damage increases exponentially as axle weight increases, and that the passage of an 80,000 pound five-axle tractor-trailer has about the same impact on highway deterioration as that of 9,600 automobile... The conventional five-axle 'semi' operating at 80,000 pounds does approximately six times more damage than the same vehicle operating at 50,000 pounds"
    State of TX
    State of OR
    The problem is not personal electric vehicles, which have to be light to maximize range, so they should not subsidize what the problem really is.

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