NCPA - National Center for Policy Analysis

Highway Funding with a Vehicle Mileage Tax

November 12, 2013

America needs to replace its motor fuel taxes with a fee for miles driven, says Diana Furchtgott Roth, former chief economist of the U.S. Department of Labor and a senior fellow and director of Economics21 at the Manhattan Institute for Policy Research.

  • Cars are becoming more fuel-efficient and miles driven are steadily declining.
  • Electric cars use no gasoline at all, so their drivers do not pay for road use, even though their vehicles still take up space on the road and cause wear and tear.
  • Federal and state fuel tax revenues are increasingly insufficient to build new roads and maintain existing ones.

Mileage-based fees would enable drivers to accurately pay for road use and get the roads for which they are prepared to pay.

With revelations that the National Security Agency is tracking Americans' phone conversations and e-mails, it is natural that some are concerned about the possibility of charging drivers for vehicle miles traveled.

  • People fear that the government will track their location -- although many smartphones do this already, whether people are walking or driving.
  • But charging drivers for miles driven does not have to mean a loss of privacy.
  • Devices in cars to measure charges for miles driven do not have to record location or trip time.
  • Car odometers, which measure miles driven, are a simple example.

Oregon is laying the groundwork for drivers to pay a "mileage-based user fee" rather than the traditional gas tax.

  • In 2012, the state successfully completed a Road Usage Charge Pilot Program.
  • It found that providing user's options for recording the number of miles travelled (including at least one option that did not use GPS technology so as to assuage drivers' privacy fears) contributed to the success of the program.

In the 21st century, charging for roads should be the responsibility of state or private providers. There is no longer any logical reason why the federal government should be responsible for funding state roads.

As the Highway Trust Fund revenues shrink, most states raising funds for their own roads will have the advantage of being able to provide them more cheaply and more quickly without federal involvement.

Source: Diana Furchtgott Roth, "Vehicle Mileage Taxes Could Help States Take Over Road Building From Washington," Washington Examiner, October 29, 2013.


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