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Taxing Problem

We’ve got a problem folks. As the price of gas increases and supplies dwindle, people drive less and switch to more fuel efficient vehicles. That’s a good thing for the environment and for the economy but the funding for transportation infrastructure is tied to a per-gallon gas tax.  We pay a federal tax of 18 cents on each gallon of gas. On top of that we we are assessed state tax. In Montana we pay an additional 28 cents per gallon. The federal tax has not been increased since 1993. These taxes are used to maintain and improve our roads, highways and bridges. As the taxes collected decrease, so does the condition of our infrastructure. It is hard to increase the gas tax for many reasons, but especially in tough economic times people tend to be resistant to any kind of tax increase.

smokeyOne of the proposed solutions to this problem is a Vehicle Miles Traveled tax (VMT). The Bugle brought up this subject not long ago. On the surface a VMT sounds like a reasonable solution. You are taxed on the actual miles you drive. There are many problems with any new type of taxation and with the VMT in particular. Robert Gibbs, press secretary to President Obama has said that a VMT  “is not, and will not be, the policy of the Obama administration“. But, somebody forgot to tell the Department of Transportation. Transportation Secretary Ray LaHood thinks that we should look at the VMT. An Associated Press article today says that the University of Iowa Public Policy Center is seeking 1,500 people to participate in a $16.5 million study for the DOT. Billings is one of six cities where volunteers are being recruited.

The study would install a small computer in the vehicles of participants to track how much and where they drive. No mileage tax will be assessed during the study. The collected data will be used to test driver’s acceptance, attitudes and driving habits and will be shared with the states. Similar systems have been tested in Oregon, California, Texas, Idaho, North Carolina and other states but have not yet been implemented.

In the opinion of the Bugle editorial staff, testing for a VMT is a huge waste of money. Not going to happen. No matter how logical  the idea sounds, there are just too many reasons why the mileage tax approach just won’t work. The principal objection of course, is one of privacy. There is just no way, citizens are going to agree with having an onboard computer that tracks where their vehicle is at all times. Proponents are quick to give assurances that the data would never be used to track drivers, but of course, the possibility of doing so can’t be avoided. Once in place, it would be a simple matter to use the information to assess traffic law violations, or track movements of criminals or even law abiding citizens. The privacy abuses of the last administration are still too fresh in our memories.

As to fairness, if everyone is taxed the same for a mile of travel, it means that a Prius would be taxed at the same rate as a Hummer and there would be an adverse affect on fuel efficient vehicle sales. Proponents are quick to point out that different tax rates could be assessed based on the type of vehicle, location, time of day, type of road, etc. This very quickly leads to an extremely confusing, costly and opaque system that would become a nightmare to administer. Such a system would surely lead to constant political tinkering. Groups with current political clout could receive lower tax rates with the flick of a microchip.

One of the popular ideas for a VMT would be some sort of congestion pricing. Taxes would increase on certain roads at certain times to reduce overcrowding on highways. This of course would only lead to making it easier for higher-income drivers to get where they are going. Normal folks, like you and me, would just end up driving more miles to avoid higher taxes, a counter-intuitive result.

You could charge a higher mileage tax for large trucks which are harder on the highways. Were does that leave Montana farmers and ranchers who have to travel a lot of miles in large trucks to get supplies and crops to market cities? And of course, how do you charge for fuel use that never sees the highway? Currently you pay tax for gas that is used in your lawnmower, chain saw, tractor, hay baler… And, how do we tax emergency vehicles, fire trucks, ambulances, etc. Can they opt out? Do they get a special rate? In any event this would lead to a lot of tax that is currently collected that would not be under a VMT.

The answer, of course, is to grit your teeth, make your case and raise the gas tax. People will thrash about and scream bloody murder, but it will be much simpler to understand, fairer all around and will not result in a massive new bureaucracy with bewildering rules. Go ahead with the study. The data will be very useful in helping to understand driving habits and can be used in other ways to improve our highways, but drop the VMT.


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