Mileage Taxes

AP is reporting that the Secretary of Transportation would like to see the adoption of a tax on miles traveled by car rather than gas taxes.

Gasoline taxes that for nearly half a century have paid for the federal share of highway and bridge construction can no longer be counted on to raise enough money to keep the nation’s transportation system moving, LaHood said in an interview with The Associated Press.

“We should look at the vehicular miles program where people are actually clocked on the number of miles that they traveled,” the former Illinois Republican lawmaker said.

Most transportation experts see a vehicle miles traveled tax as a long-term solution, but Congress is being urged to move in that direction now by funding pilot projects.

There are two problems with this proposal: 1) privacy concerns and 2) climate change.

On the first issue, there would have to be a serious discussion of how miles traveled would be calculated. Some proposals call for monitoring by GPS locators installed in the car. This has the possibility to be quite troubling, and any system that essentially rests on a ‘trust us’ argument from the government will draw considerable opposition. I am fairly ignorant about the inner workings of most cars, but I have to believe that either the existing odometers, or simple modifications to them, would be sufficient for any test program.

Personally, I think a far easier and less concerning measure would be a tax on tire sales – accidents and vandalism would upset the metric, but I believe that wear-on-tires must correspond fairly directly to wear-on-road. Higher taxes could be charged for studded tires or chains, which tear up the road but are necessary in some climates.

The second issue is more troubling. Gas tax revenues are falling, and will continue to fall, in large part because people are shifting toward less driving and/or driving more fuel efficient vehicles. Although the nominal reason for gas taxes may have been to fund infrastructure construction and repair, and because gas is a fairly inelastic good; currently gas taxes are also seen as a way to combat climate change. This is a good goal, and gas taxes seem an acceptable way to approach it, however much a full carbon tax would be better, and however much gas taxes will become increasingly regressive as those with the money to buy newer hybrid cars do so. For this reason, the gas tax cannot be eliminated in favor of a mileage tax. We should do both.

A mileage tax, either calculated directly or charged to tires, will be an increasingly fair way to fund infrastructure precisely because hybrid car drivers won’t underpay their fair share for infrastructure maintenance.

However, without the creation of a carbon tax, the gas tax comes closest to taxing the carbon output of cars and is necessary to create an incentive to drive more fuel efficiently. Indeed, the tax should probably be higher. More importantly, though, we are going to see increasingly high costs associated with climate change. Whether this takes the form of dike or levee construction, wildfire fighting costs, repair and rescue costs for storm victims, or new water infrastructure, we should expect them to increase significantly. (Any community that relies on snow or glacial melt for its summer water supply is going to have to build more storage capacity to deal with increasing seasonality of supply.) This, of course, is before anything truly catastrophic happens or we find ourselves host to hundreds of thousands of climate refugees.

All of this goes to say that in the absence of a new carbon tax, gas taxes should be retained, and increased, with their revenues reserved for climate change mitigation,  remediation, and prevention. By all means, let us adopt a mileage tax to pay for traditional infrastructure projects, but we need to keep the gas tax for other reasons. Yes, this would be a tax increase and no, maybe it shouldn’t happen in the middle of this particular economic crisis. However, every year that passes is going to result in greater costs associated with climate change and the sooner we start saving, and spending, to deal with it, the better.

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Published in: on February 20, 2009 at 11:42 am  Comments (1)  
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  1. […] second issue pertains to paying for our freeways. I’ve discussed a mileage tax before, and how it should replace the gas tax as the means for paying for transportation […]


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