Higher gear: To fund transportation, congress should tax travel, bot fuel

Paul Sorenson, Liisa Ecola, and Martin Wachs argue for funding highways by using a tax on miles traveled, rather than the current method of a tax on fuel:

“Better fuel economy is good for the economy, energy independence, and reduced air pollution. But better fuel economy also means that motorists drive more miles with each fill-up at the pump and pay substantially less through fuel taxes per mile of driving than they did in past years. In contrast, VMT fees, enabled by new electronics and communication technologies, could potentially generate a reliable revenue stream while upholding the core principle that users should pay for the system in proportion to their use.” They suggest that three options for implementing distance-based fees appear to offer the greatest promise: (1) estimating mileage based on a vehicle’s fuel economy and fuel consumption, (2) metering mileage based on a device that combines cellular service with a connection to the onboard diagnostics port, and (3) metering mileage based on a device that contains a global positioning system (GPS) receiver.” And they note that states would like the federal government to take the initiative in moving to a more sustainable revenue source.

Also weighing in is the Congressional Budget Office with a comparison of a VMT tax and the fuel tax in Alternative Approaches to Funding Highways. “VMT taxes are qualitatively similar to fuel taxes in their implications for equity. Like fuel taxes, they satisfy the user-pays principle, but they impose larger burdens relative to income on people in low-income or rural households. However, to the extent that members of such households tend to drive vehicles that are less fuel efficient, such as pickup trucks or older automobiles, those highway users would pay a smaller share of VMT taxes than of fuel taxes.” As to implementation, “Toll roads, lanes, and bridges are common in the United States, and several states and foreign countries levy weight-and-distance charges on trucks.”