Oregon implemented the nation’s first gas tax way back in 1919, and now it seems ready to blaze a new trail once again. The state has been testing out a new tax based on miles driven rather than fuel consumed.
The gas tax is broken, advocates claim, and this vehicle-miles traveled (VMT) tax could be the solution our transportation infrastructure requires. The problem is that as cars become more and more fuel efficient, they consume less gas, pay less in taxes, and government has less money to spend on road and bridge upkeep. Combine that with the fact that the gas tax hasn’t been raised or adjusted for inflation in twenty years, and you’re confronted with an undeniable fact: we’re not paying the true cost for driving.
Raising the gas tax is politically toxic, especially at the federal level. Oregon isn’t holding its breath for Congress to act and has been working since 2001 to test out the VMT tax. The Economist reports:
The VMT policy has been fine-tuned in pilot programmes; the once-sceptical American Civil Liberties Union is now satisfied with the privacy protections (personal data is destroyed after 30 days), and local environmentalists cautiously back the idea, though they would like lower fees for more efficient vehicles. […]
A [state] bill that would have applied a VMT fee to all new vehicles doing 55mpg and above died in the last legislative session; instead, 5,000 volunteers will join a new VMT scheme in July 2015. They will be charged at 1.5 cents per mile rather than paying the state petrol tax (30 cents per gallon).
Incorporating a vehicle’s weight into the VMT scheme makes even more sense—18 wheelers do more damage to roads per mile traveled than smart cars. Again, we’re not holding our breath for congressional action given today’s political climate, but this makes sense. In the meantime, telework can take cars off the road, especially at peak driving times (rush hour).
Normally speaking, VM is skeptical about complicated tax wheezes like this one, and before giving this our seal of approval we’d like to know a little bit more. Governments are always looking for clever new ways to raise more money with less squawking from taxpayers, but we think that on the whole most governments spend too much time and energy figuring out how to tax people, and not enough energy figuring out how to cut costs.
In many states, the highway repair and construction business is a very comfy little corner of the economy where politically well connected firms, often with labor union support, dominate the bidding process. Politicians and contractors happily connive at ways to pass costs onto the taxpayers. This kind of routine backscratching doesn’t usually get much press scrutiny and over the decades these systems become less and less efficient.
If the country or a particular state really needs money to repair, maintain and improve its road system, we are all for getting it done. But we are deeply suspicious of claims by bureaucrats, contractors and their paid lobbyists that vast quantities of money without reform is the only way to fix the roads.
What every state in the union needs much more that glitzy new ways of taxing drivers would be some smart think tanks coming up with innovative ways to cut the costs of routine expenses like infrastructure repair and sets of best practices to make governance generally cheaper and more effective.