Proposal for government to study driving tax by mile

I’ve occasionally written about the gas tax (see here and here for recent examples) as well alternative forms of deriving tax revenue from driving (see here). There is a report that the Obama administration has proposed a new federal study that would look at taxing drivers per mile driven:

The Obama administration has floated a transportation authorization bill that would require the study and implementation of a plan to tax automobile drivers based on how many miles they drive…

Among other things, CBO suggested that a vehicle miles traveled (VMT) tax could be tracked by installing electronic equipment on each car to determine how many miles were driven; payment could take place electronically at filling stations.

The CBO report was requested by Senate Budget Committee Chairman Kent Conrad (D-ND), who has proposed taxing cars by the mile as a way to increase federal highway revenues…

The administration seems to be aware of the need to prepare the public for what would likely be a controversial change to the way highway funds are collected. For example, the office is called on to serve a public relations function, as the draft says it should “increase public awareness regarding the need for an alternative funding source for surface transportation programs and provide information on possible approaches.”

I have several quick thoughts about this:

1. Doesn’t the government have to go to some method like this in the future with the advent of electric cars? If people are buying less gasoline (which is generally thought of as a good thing), then gas tax revenue will decrease.

2. If a tax like this were implemented, does this deincentivize purchasing electric cars or more fuel-efficient vehicles? Although you might pay less at the pump for gas, you would then pay more for driving longer distances.

3. How much of this is going to turn into a public relations battle? It is interesting that the proposed study would look into this. I’m sure a few things would worry some people:

a. How is the government going to use this tracking information since they will already be tracking the miles driven? Of course, this is potentially already an issue in states with toll transponders like Illinois and the IPass system

b. Is this a tax on mobility or on the American way of life (i.e. sprawl)? It would be interesting to see how this new tax might compare to existing costs for driving. Overall, this article reminds me that driving is not cheap – it may feel like freedom but it is expensive freedom.

4. Is a tax for miles-driven too broad? Different vehicle sizes put different stress on road surfaces. Should a tax also take this into account? Or is the difference between a Honda Insight and a Honda Pilot not significant?

5. There could be some interesting consequences of this. Would there be fewer road trips and driving vacations? Would the airline industry (and the rail/high speed rail industry) benefit? Would putting the costs into miles driven rather than tacked onto a gallon of gasoline make people think twice about purchasing a home further from their work?

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