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OPINION: New approach to shifting from per-gallon taxes to per-mile charges

Robert Poole

Robert Poole

Ever since serving on the Transportation Research Board special committee on the long-term viability of fuel taxes in 2005, I have been persuaded that per-gallon fuel taxes are not a sustainable source of funding for 21st-century roadways. A subsequent national commission in 2008 (on which my Reason colleague Adrian Moore served) concluded that charging per mile rather than per gallon of fuel would be the best replacement funding source. But can that difficult transition be made?

That’s the topic of a new Reason policy brief released last month. It begins with the major problem facing advocates of mileage-based-user-fees: unpopularity. The National Cooperative Highway Research Program’s NCHRP Synthesis 487 found that the average support for MBUFs in numerous polls was just 24 percent. This is partly because of public concerns and media portrayals of mileage-based user fees (MBUFs) as “Big Brother in your car.” It also reflects fears that this will end up being an additional tax, rather than a replacement for fuel taxes.

The thrust of the brief, “How a State Could Transition From Per-Gallon Gas Taxes to Per-Mile Charges,” is that to gain enough support, the change to MBUFs must represent a genuine value proposition for those expected to pay per mile instead of per gallon. To flesh that out, I suggest that any MBUF should be designed to remedy all the major shortcomings of fuel taxes, not simply their future decline in revenue. These include that the fuel tax is not transparent (people have no real idea how much or how little they are paying for roadways via fuel taxes); it is no longer a pure user fee (users-pay/users-benefit); and it is now seen by most Americans as just another tax.

By contrast, with other vital utilities (electricity, gas, water, telecom, etc.) people pay based on the amount of the service they use, they pay directly to the service provider, and they know whom to blame if the service is poor. This argues for making the MBUF a true user fee, paid to the relevant roadway provider, and clearly reported on usage-based bills.

I also argue that the most realistic way to phase in MBUFs is state-by-state rather than from the top down via a federal mandate and a federal MBUF. Americans have far more confidence in state and local government than they do of the federal government when it comes to transportation funding and many other things. Just compare the ability of states to get voter consent for increased fuel taxes versus Congress being unwilling to do likewise for federal fuel taxes ever since 1993. State and local governments own the roadways, and they have the primary responsibility for making sure they are modernized and operated properly. Moreover, a federal mandate when most of the public does not understand or accept MBUFs would likely not get through Congress—and a big defeat there could set back for many years the needed transition from per-gallon to per-mile.

Accordingly, the brief sets out a scenario in which Congress encourages pioneer states to come up with a critical mass of public and political support for making this transition. It suggests that a state wanting to begin the transition start with another big problem that needs solving, but which people can more readily understand: rebuilding and modernizing the aging Interstate highways in those pioneer states. And instead of asking people to accept some kind of new technology, start out using today’s well-accepted all-electronic tolling, configured to charge on a per-mile basis. If this were done for all of a state’s limited-access highways (Interstate and non-Interstate), over the years of reconstruction it would transition more than one-third of all that state’s vehicle miles of travel (VMT) to per-mile charging.

Once that program was well-established in a state, it would then be easier to move on to state highways and local roads, and the brief suggests a way to apply the same kinds of principles of transparency and accountability for those roads. In the average state, about 43 percent of VMT is on highways with state or U.S. numbers and 22 percent is on local streets and roads. Annual VMT totals for those roadways would be used by the state DOT to allocate the MBUF revenues to those providers each year.

Robert Poole is director of transportation policy at Reason Foundation, a public-policy think tank.

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