The High Revenue Potential of a Mileage-Based Driving Fee

The mileage-based driving or user fee, also called vehicle-miles-traveled or VMT fee, road user fee or road usage charge, has many advocates and is being advanced in many states, but not the federal government.

Eric Jaffe writes about "an exhaustive new menu of funding options presented by the American Association of State Highway and Transportation Officials (AASHTO), which evaluates a number of long-term possibilities primarily on revenue potential." Options evaluated include:

• Raising the federal 18.4 -cent gas tax, not increased since 1993, by a dime; adding 15 cents to 24.4 -cent diesel tax
• Adding a sales tax (or perhaps wholesale fuel sales tax) to fuel sales
• Dedicating 5 percent of personal income taxes to transportation 

The option with the greatest revenue potential is far away the VMT fee.

A penny a mile tax on typical passenger vehicles would generate $175.58 billion by 2020. Meanwhile, a four-cent-a-mile fee on trucks, which cause more damage to roads, would bring in another $70.73 over that same period. Altogether a mileage-based driving fee would produce an astonishing $246.31 billion by 2020.

It needn't be a flat per-mile fee. It "could be tweaked to reduce traffic by adding a rush-hour surcharge, or to encourage electric or hybrid cars by providing a discount," notes Jaffe. Privacy, a major issue for those who resent Big Brother knowing where they are going, has been dealt with effectively by the Oregon Department of Transportation in their new voluntary program to start soon.

One downside: "With so much money on hand, lawmakers might be tempted to build more roads than necessary rather than fix existing ones, creating new maintenance costs that drag on taxpayers for years," writes Jaffe.

A good place for Congress to start would be passing Rep. Earl Blumenauer's (D-Ore.) 'Road User Fee Pilot Project Act'.

[Hat tip to AASHTO Daily Transportation Update.]