Pay As You Go Vehicle Tax A Solution?

                A recent Freakonmics podcast caught my attention when gas prices and privacy concerns were raised. Like many others, I’m conscious of gas prices, and grudgingly cough up the near fifty bucks each time I’m at the pump. Stephen Dubner, co-author of the Freaknomics series, explained that we’re at a point in our country’s history where we get more miles per gallon than ever before, and accordingly, citizens have an incentive to drive more. As fuel economy advances, the cost of each mile decreases, and the nation’s transportation budget takes a hit. In other words, better fuel mileage translates to less money for roads and bridges. Tax revenues operate at a fixed rate, as opposed to a sales tax, for example. Currently, the federal rate is 18 cents a gallon. States add an additional fixed tax (Minnesota’s state excise tax is 28.5 ranking it 18th highest based on state taxes). Because it’s fixed, it doesn’t increase when the price of gas goes up. Accordingly, gas tax revenues increasingly lose purchasing power. 

                So what’s the solution? Dubner explains that for whatever reasons, gas taxes are a “no-go zone” for politicians. Alternatively, Robert McDonnell’s (Governor of Virginia) proposal to eliminate the state gas tax and instead raise the sales tax has received recognition. However, there is growing support for a vehicle miles traveled (VMT) tax. Such a tax would operate by taxing drivers per mile driven. This scheme would charge drivers for the same amount of road covered, regardless of the type of car one drives. In response to this suggestion Freaknomics radio host, Kai Ryssdal, exclaimed “This smacks of Big Brother watching me when I drive, dude.” Dubner, on the other hand, offered this: “We’ve all gotten used to willingly carrying around a GPS device with us at all times, which is what a smartphone does, right? We’re also getting used to the ideas of electronic tolling where we don’t have to stop at the booth. So I wouldn’t be shocked if we were to see some per-mile taxing in the future.” Rob Puentes, a transportation policy expert at the Brookings Institution and a VMT proponent, offered support, “If you are driving on the Beltway during rush hour consistently adding to the traffic on those highly congested roads, you’d be paying more, and then those revenues would go back to the road you are using.” 

                The podcast reports that “at least 18 states have pursued VMT pilot projects, and in the past five years, legislatures in at least 11 states have considered more than 20 proposals to establish or study state level fees of this kind.” Obviously, privacy is a concern. A study by the Metropolitan Washington Council of Governments Transportation Planning Board found that 86 percent of Washington, D.C. commuters oppose having a GPS device installed in their vehicles to track their miles traveled.  Personally, I support this idea, at least theoretically. I wouldn’t oppose having a GPS tracking my mileage as long as my personal information isn’t exploited. The use of the GPS would have to be explicit, but as long as I know that someone isn’t monitoring my whereabouts for anything other than mileage I’d be comfortable, or at least open to it. From an economic standpoint this free market concept is nearly perfect; you pay for what you use. However, Freaknomics commentators are less convinced. Many suggest that vehicle weight be brought into the equation since large trucks contribute to most of the wear and tear on the roads. Some claim that this proposal removes an important incentive to purchase fuel efficient vehicles.  However, as the owner of a fuel efficient Ford Fusion, I would still benefit from filling up less often. Another user is concerned about how the state would define road usage. 

                Minnesota’s outdated infrastructure is evident and VMT offers a viable potential solution. If the community vehemently contests this suggestion than perhaps we can look to Finland for guidance. There, traffic fines are indexed based on a driver’s salary (you’re fined 20 percent of one month’s take-home pay). “Just a few tickets from a few speeding billionaires could help balance any budget in a hurry!”