Need Convincing that Vehicle-Miles-Traveled Fees Make Sense?

Eric Jaffe's July 1 article in CityLab has 18 reasons, and not one in opposition. The date is significant as it marks the official kickoff of the Oregon Road Usage Charge program.

4 minute read

July 6, 2015, 11:00 AM PDT

By Irvin Dawid

Here are a few of Jaffe's reasons in support of VMT fees that I found particularly compelling:

#4. For one thing, cars are much more fuel-efficient and #7: a per-mile fee is a true “user” fee

The relationship between what you spend at the pump and how much you drive "has become weaker and weaker as vehicles have gotten more fuel-efficient," writes Jaffe. "That means on the average tank of gas, a car does a lot more damage to roads today than it’s done in the past."

In fact, Governing's Alex Marshall wrote categorically that the gas tax is not a user fee.

I would add that while a gas tax is a near-perfect carbon tax - it's a poor proxy for a driving fee due to fuel efficiency, particularly for vehicles that don't consume gas [see #12].

The best user fee may be the toll one pays on a road or bridge, as the Virginia Supreme Court ruled in 2013. Next best: a VMT fee. No reason we can't have both.

#8. Better still, it’s not a hidden fee 

Do motorists distinguish the gas tax, let's call it a "transportation fee" for this discussion, from fuel costs, particularly when gas prices are extremely volatile? With OReGO, motorists will get billed by their provider, e.g., Verizon Telematics, for the miles they've driven, crediting the estimated fuel taxes paid as they will still be paying gas taxes when they fill up.

There are enormous benefits to separating fuel charges from road charges - just look at the argument House Ways and Means Chair Paul Ryan (R-Wis.) expressed last month for not raising gas taxes:

So I want to make very clear: I’m against raising the gas tax. There’s not much happening in this economy to help it grow, but lower gas prices is one of them...So we are not raising gas taxes—plain and simple.

With that statement it became clear that it's just as difficult to raise gas taxes when gas prices are low as when they are high.

Ryan indirectly brings up the "equity aspect" of the gas tax. Opponents who are quick to discredit the income tax and have shown little concern for the plight of low income people are all too quick to cite the regressiveness of the gas tax. Just as VMT fees can be adjusted for emissions, they can be adjusted to the income bracket of the motorist, i.e., a sliding scale. Try doing that with a gas tax.

#12. It can be adjusted to discourage pollution (and for other factors as well, e.g. motorist income, vehicle weight, inflation)

"Electric vehicle owners often oppose a per-mile fee because they say it offers a disincentive to go green," acknowledges Jaffe, but notes that "EVs still save money at the pump, they still damage the road, and if they draw from a coal-based energy grid they can even create more pollution than gas cars. Still a per-mile fee is flexible enough to slap gas-guzzling clunkers with a surcharge and squeaky clean EVs with a discount as local governments see fit."

Clearly a VMT fee should not reward gas guzzlers and disincentive green cars - which is what OReGO's flat 1.5-cent driving fee does. For that reason, the Oregon Department of Transportation (ODOT) has limited the amount of low mileage vehicles that can volunteer to be part of the program which is limited to 5,000 vehicles.

  • No more than 1,500 vehicles rated at less than 17 mpg.
  • No more than 1,500 vehicles rated from 17 to less than 22 mpg.

But don't take that to be a fault of VMT fees - the authorizing legislation, SB 810, mandated a flat fee to be roughly equivalent to the 31-cent state gas tax. Since this is the first-of-its kind program, ODOT is trying to see if the public will accept the basics of paying per-mile driven rather than per-gallon burned.

Even more important than adjusting the fee for factors such as emissions or vehicle weight is to ensure the fee is indexed to construction cost inflation as Carl Davis of the Institute on Taxation and Economic Policy discussed here last month, calling Oregon's Road Usage Charge a "half-baked solution" due to its flat nature.

#15. Privacy got you worried? Pick a non-GPS option.

#19. (not listed by Jaffe): Reasons you may prefer a VMT fee - ancillary programs

According to the bulletin from ODOT announcing the opening of OReGO, their 'private partners' offer programs that bear some similarity to what my cable company does - sell me on additional services

With Azuga, drivers can also log trips, monitor fuel use and set up GPS-enabled Safe Zones to keep teen drivers safe. Azuga will soon add connected smartphone apps that will help drivers diagnose their check engine light, find their parked car and more. Verizon Telematics users can also link their account with pay-by-the-mile insurance.

In conclusion:

On the federal level, it's clear that the gas tax has an unparalleled level of failure due to politicians' reluctance to increase it to keep up with inflation and vehicle fuel efficiency, thus requiring large and regular "bailouts", i.e., General Fund transfers for the driving public.

"Between September 2008 and August 2014, such transfers totaled $65.3 billion," according to the summary in Eno's new Highway Trust Fund primer (page 4), [PDF]. Rather than talking about raising the 18.4-cent, 1993 gas tax, more key policy makers appear to be considering the repatriation tax. How's that for a user fee? 

Wednesday, July 1, 2015 in CityLab

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