BY-THE-MILE ROAD TAX COULD REPLACE BY-THE-GALLON FEDERAL FUEL TAX

July 2, 2009

By the year 2020 the gasoline tax may be replaced by a monthly tax bill based on each mile you drive. What once was science fiction is being field-tested by the University of Iowa to iron out the wrinkles should a by-the-mile road tax ever be enacted, says the Kansas City Star.

Such a tax is getting a hard push from a growing number of transportation experts and officials.  Two primary reasons for this push include:

  • The struggle of the traditional by-the-gallon fuel tax to keep up with road building and maintenance demands.
  • The possibility that fuel tax revenues could fall even farther behind as vehicles' gas mileage rises and more alternative-fuel vehicles come on line.

Earlier this year, a federal commission concluded that the road tax was the "best path forward" to keep revenues flowing to highway and transportation projects, and could be an important new tool to help manage traffic and relieve congestion:

  • The commission pegged 2020 as the year for the federal fuel tax, currently 18.5 cents a gallon, to be phased out and replaced by a road tax.
  • One estimate of a road tax that would cover the current federal and state fuel taxes is 1 to 2 cents per mile for cars and light trucks.

The commission said work needed to start soon to prepare for a road tax.  But more work has already been done than most people probably realize, says the Star:

  • Oregon did a field test in 2007, concluding it was possible to collect a road tax.
  • The University of Iowa's Public Policy Center -- with support from the Federal Highway Administration and 15 states, including Kansas and Missouri -- began work a decade ago on how a road tax could be deployed.
  • Now the University of Iowa, with the help of a $16 million federal grant, is beginning the field test that will eventually include 2,700 vehicles in six states.
  • The vehicles equipped with computers and GPS devices will keep track of the miles traveled and send the data through wireless technology to a billing center that will compute "simulated" tax bills.

Source: Steve Everly, "By-the-mile road tax could replace by-the-gallon federal fuel tax," Kansas City Star, July 1, 2009.

 

Browse more articles on Tax and Spending Issues