Why Motorists Should Pay by the Mile

June 18, 2012

There has been substantial focus recently on motor fuel taxes paid by consumers and their collection for the ostensible purpose of investing in roadways.  Specifically, more and more states are moving away from this system, recognizing that it is a poor and highly imperfect attempt at a transportation user fee, says Robert Poole, director of transportation policy at the Reason Foundation.

The problems with motor fuel taxes vary substantially, but they combine to offer a compelling case for moving to an alternative form of transportation taxation.

  • First, the gas tax is based on gallons of fuel consumed, rather than the number of miles driven, meaning that as cars become more efficient in miles-per-gallon, they pay less in taxes for road upkeep despite using roads at a constant (or greater) level.
  • Second, federal policy is actively promoting alternatives to traditional, gasoline-consuming vehicles, meaning that more and more drivers are not paying into the system at all.
  • Third, except in a handful of states, gas taxes are not indexed for inflation, meaning that over time the real value of gas tax receipts has fallen precipitously (the Cato Institute estimates that fuel taxes today are one-third of what they were at the beginning of the interstate highway era.)

A more agreeable system for financing the maintenance and expansion of the nation's roadways would tax drivers instead on the number of miles driven on the roads -- a policy recommendation made feasible by recent technological gains in tolling.

  • The current system is laden with side-expenditures for projects only nominally related to roadways (such as scenic trails, mass transit, billboard removal, etc.).
  • Per-mile taxation would also allow governments to charge different rates based on the type of roadway -- users driving primarily on cheap residential roads could pay a lower rate than those who drive largely on expensive urban highways.
  • Finally, and most obviously, per-mile taxation is a much better proxy of overall use than a gasoline tax, bringing it into line with modern, pay-per-use utilities.

Thus, replacing fuel taxes is not just about ensuring adequate, sustainable funding for the highways we all depend on.  It is also the key to transforming what is now a poorly managed, non-priced, government-run system into a 21st-century network utility.

Source: Robert Poole, "Why Motorists Should Pay by the Mile," Reason Foundation, June 4, 2012.

For text:

http://reason.org/blog/show/why-motorists-should-pay-by-the-mil

 

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