Get Ready for the VMT
Our Latest Government Acronym is Another Flawed Idea - Except for Electric Vehicles
I was a Deputy Assistant Secretary of Transportation for Public Affairs in the George H. W. Bush Administration (1992) the last time Congress voted to increase the federal gas tax by a nickel per gallon, to its current 18.4 cents per gallon (24.4 cents per gallon for diesel). It pales in comparison to nearly all state gasoline taxes, some of which exceed 50 cents per gallon (looking at you, California, Pennsylvania, and Illinois).
And don’t get me started on toll or turnpike revenues. Anyone who has driven the Pennsylvania Turnpike (the nation’s most expensive - it costs $60 to traverse the state, one way) or I-95 between New York and Virginia knows it all too well.
But current gas tax revenues - thank rising CAFE (Corporate Average Fuel Economy) standards, more fuel-efficient cars (electric cars obviously don’t pay gas taxes), and more recently, less driving (especially commuting) thanks to the pandemic. The Federal Highway Trust Fund has been running on fumes for a while, with increasing infrastructure needs and declining gas and diesel tax revenues. No shortage of experts gives our infrastructure increasingly poor grades, with 43% of America’s roadways considered to be in “poor” or “mediocre” condition.
One idea that’s been floating around for a while has been a new Vehicle Miles Traveled (VMT) tax. My friend Ray LaHood, a former GOP Congressman and Obama Administration Secretary of Transportation, floated the VMT back in 2009.
The idea seems so simple and fair that at first glance, it is appealing - making people pay a real and fair “user fee” for total miles traveled. Except when you take a closer look. And it may take an interesting coalition - persons concerned about privacy, rural Americans, truck drivers, retailers (online, as well as brick and mortar), and environmentalists concerned about climate change (you read that correctly) to defeat or dramatically revise it.
Why the privacy concerns? How do you expect the government to find out how many miles you’ve driven? Will they trust you to report the mileage on your vehicle, on an annual basis, as part of your annual federal tax return, or will they find a way to track your miles electronically? Perhaps have car makers install devices that collect mileage data, like requiring our existing “EZ Pass” or other transponders to add mileage tracking? Yes, commercial drivers track their mileage now, but what about commuters and the traveling public? How does that make you feel? Like this, maybe?
Opposition from rural Americans and truck drivers is understandable. If you live in, say, Henryetta, Oklahoma (population 6,000) and drive to and from Oklahoma City (about 90 miles each way) or, more likely, between Oklahoma City and Tulsa a few times per week (about 100 miles each way), you could be looking at 30,000 or more miles traveled per year (on top of your tolls for driving on the Turner Turnpike). Uber/Lyft and delivery drivers could be especially hard hit. Of course, those costs will be passed on.
Same with retailers, including Amazon. Two company trucks I see most on the major roads these days, after UPS and FedEx, are Walmart and Amazon (grocery store chains like Kroger are not far behind). They are experts at factoring in their costs into the price of goods that you pay. About 70% of goods are shipped via trucks. Sure, a lot of goods are shipped by rail, but that only takes you so far unless you have a rail spur that delivers rail cars to your home or office. Good luck with that. But expect Warren Buffet to endorse the VMT since his Berkshire Hathaway company owns Burlington Northern Sante Fe Railroad.
But, environmentalists? Really?
Yes, really. This, from Grist magazine, explains it best from their point of view.
A VMT tax may sound fair on the surface — make every driver pay — but that’s only if you focus on the wrong byproducts of driving. Sure, building and maintaining roads takes money, and even electric cars that emit no tailpipe pollution put demands on the road system. A VMT tax makes all users pay equally for their usage if you define usage in the narrow sense of miles traveled. But drivers of gas guzzlers are using, and abusing, public goods such as roads and air far more than drivers of efficient cars are. Bigger, heavier cars take up more road space, damage roads more, and cause more harm to other drivers in accidents. And road repair is a minor cost and inconvenience compared to the effects of catastrophic climate change. It’s even pretty small potatoes just compared to the health impacts of particulate pollution from standard gasoline cars. Drivers of electric cars, hybrids, and efficient standard cars deserve a reward — and drivers of SUVs deserve to pay more because they’re polluting more.
What’s far more important than a funding stream to spend on roads is a funding mechanism to discourage emissions of CO2 and conventional pollution. With a gas tax, you get both. A higher gas tax is the best policy lever that exists to increase average fuel efficiency. As Brad Plumer reported in The Washington Post in 2013, “A new paper from researchers at MIT’s Global Change program finds that higher gas taxes are ‘at least six to fourteen times’ more cost-effective than stricter fuel-economy standards at reducing gasoline consumption.” A gas tax enables us to align transportation policy with our climate goals.
There are only two ways that a VMT makes sense, in my humble opinion - that it replaces federal (or, if they agree, state) gasoline taxes; or, that it is limited to vehicles that do not currently contribute to the Federal Highway Trust Fund, such as electric vehicles.
Using the VMT to replace existing gasoline taxes would reduce the cost of fuel and replace the tax with an offset seen as more fair. But Biden Transportation Secretary Pete Buttigieg clearly isn’t factoring that in - he and others appear to support the VMT as a new tax that would hit lower-income and rural Americans who use and need their vehicles.
Yes, Oregon and Utah have pilot programs underway to test the VMT. Fine. Let’s see how it goes. But neither state really qualifies as a strong sample or indication of the real impact of a new VMT, since they are relatively small in population and do not have a significant number of manufacturers or logistics centers, at least compared to other states.
A VMT on top of gasoline taxes would be inflationary, hit lower-income and rural Americans hardest, and make us less competitive in the global market. It raises privacy concerns. I’d rather just honestly increase the federal gasoline tax and maybe index it to keep up with inflation and consider imposing a VMT only on electric vehicles so they pay their fair share for using our taxpayer-funded roads and bridges. And while we’re at it, let’s take a close look at how the Federal Highway Trust fund is actually used. A lot of it doesn’t go to highways, roads, and bridges. And also, let’s take a look at how efficiently the money is spent in states to construct and rehabilitate highways. Frankly, other countries may be doing it more cost-effectively.
Electric vehicles only comprise about 3% of vehicles sold, but that number is expected to increase. Since Uncle Sam has already heavily subsidized their industry with very generous tax credits, maybe it’s time for them to pay a bit back for using the same roads the rest of us use. It isn’t like electric cars are more “carbon-friendly” than their gasoline-fueled cousins. Seems fair.