Mileage tax could fund highway projects

By | March 15, 2007
The cost of maintaining and expanding U.S. roads and infrastructure has sparked debate over creative solutions to future budget concerns and the role of biofuels in that discussion. With more cars on the road and more miles being driven than ever before, it may seem counterintuitive that revenue from state and federal gas taxes have stabilized and are expected to decline in terms of purchasing power. However, with biofuels exempt from most forms of taxation, and inflation affecting the cost of construction materials, the gas tax has ceased to be the cash cow it once was.

Currently, two states-Minnesota and Oregon-are investigating a fee based on the number of miles traveled, rather than the current fuel tax that is assessed on gasoline and diesel. According to Kevin J. Sullivan, the former secretary of transportation for Massachusetts, "the old pay-as-you-go system is not working." Fuel taxes aren't tied to inflation and don't change as roadway maintenance costs increase.

In Oregon, the first state to ever implement a gas tax in 1919, the tax would accrue while the driver traveled with information being stored in an onboard, GPS device. When the vehicle pulls up to a pump at a gas station, the information would be accessed and downloaded, then added to the cost of the fuel. The tax already on the price of the fuel would be deducted for drivers with the system; drivers without the system would pay the regular gas tax.

Minnesota's plan recently received $5 million for "a pilot project to promote mileage-based transportation user fees." According to Gov. Tim Pawlenty, the state needs "fuel-neutral" forms of revenue creation, and a mileage tax "would allow us then to charge by mile driven, regardless of fuel source."

Proponents see the approach as one way to buoy strained infrastructure needs. At the federal level, "the gas tax has only been raised five times in the past 50 years. It is a very unpopular tax," Sullivan said. A mileage tax, or fee, would be one among many creative ways to restructure revenue creation.

Critics point out that the mileage tax treats all vehicles equally, but not necessarily equitably. The cost of a gallon of fuel would be the same for every vehicle type, and once the mileage charge was added, the benefits of fuel-efficient vehicles would be severely diminished. "[Proponents of mileage taxes] don't mean to deincentivise hybrids and fuel efficient vehicles," said Kara Kockelman, a professor of civil engineering at the University of Texas. "They just need to keep the money coming in."

Some drivers are also concerned that the programs will treat light-duty and heavy-duty vehicles as essentially the same when they are not.

In Oregon and elsewhere, the onboard technology may ultimately track the vehicle's whereabouts in an effort to mitigate congestion. Bottlenecks in the system-a particular bridge or roadway-may one day have a higher premium to discourage use during peak hours. However, the same road might have only a minimal charge during low-volume hours and late at night. Kockelman said this is ideal for those managing the networks, as well as travelers seeking reliable, low-stress travel, because "ultimately [those in charge of road pricing] do expect to know where you are." Of course, there may be privacy issues, but accurately pricing heavily trafficked areas might outweigh such concerns.
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