“Vehicle Miles Traveled” Tax Dead

Sen. Haugen (Senate Democrats)

Sen. Haugen (Senate Democrats)

Gas tax revenues, an important part of how we fund highways, have been declining along with fuel consumption.  Officials wondering how to plug the gap have floated the idea of “vehicle miles traveled” tax, which would basically charge you for each mile of road you use.

Andrew Austin reports that Senate Transportation Chair Mary Margaret Haugen (D-Camano Island) has declared that idea dead for now.   And that’s good news.

The point of a VMT tax is that it raises revenue while discouraging driving.  But consider:

  • A gas tax also discourages driving.
  • A gas tax encourages use of fuel-efficient vehicles
  • A gas tax requires no new bureaucracy to implement.
  • A gas tax does not require the government to track your movements with a transponder.  I’m not really into tinfoil hats but this seems unnecessarily intrusive.

It may be that the revenue isn’t adequate, but there’s a simple solution: raise the gas tax.  It may be that in the far future most vehicles won’t burn gasoline.  But I’m not holding my breath, and we can address that problem if and when it occurs.

On a related note, USDOT Secretary Ray LaHood agrees with me.  More on the meeting that spurred this comment after the jump.

Also during the meeting, a legislature-sponsored study said nice things about using tolling to fund transit.  As for other funding sources, Austin reports:

On a less optimistic note the funding report does not propose any new, significant, or sustainable funding sources for transit. In terms of additional local options the only tools they recommend is a .1% extension in local sales tax and a $2 per month employer tax. We are hearing from transit agencies that they are no interest [sic] in getting more sales tax authority being that it is a regressive, volatile unsustainable funding source.

“Sustainable funding source” is probably code for MVET, as a high-earners income tax would also be a very volatile funding source.  To be fair, Page 107 of the report does suggest a higher vehicle license fee as one “medium-term” solution.

Comments

    • barman says

      It would require a change to the constitution. So, it would be very difficult.

      However, pushing for the money to be sent to the general fund, thereby leaving it open to be spent on higher education which is currently suffering could gain support. People talk all the time about being mind boggled by huge projects like the AWV tunnel while tuition rates skyrocket. Maybe they don’t understand how restrictive our buget is?

    • Matt L says

      Hard. It’s a provision of the State Constitution. Any change to the Constitution requires a 2/3 vote of each house of the legislature and then a majority vote of the people at the next general election.

    • Martin H. Duke says

      A much easier course would be to levy the sales tax on gasoline and use it for whatever you want.

      • Anc says

        Sneaky, sneaky. But if this would be so easy, why has it not been done before? Would SCOWAS let it fly? They seem to pretty Strict Constructionists.

      • Matt the Engineer says

        Well, look at what a quick Google can get you. This clearly was argued by the Attorney General back in 1974. I’m no attorney (hence the name), but I’m guessing someone decided this exact issue in one direction or the other. Anyone skilled at looking up case law?

      • Matt the Engineer says

        Wait a second. I thought this was an opinion cited to a judge. This was a clarification of law cited to a State Representative. Doesn’t that mean this is effectively law (at least until challenged in court)?

        To recap, Attorney General Gorton published an opinion that only state fuel and license taxes are restricted to be spent on roads. City, county, and local taxes on fuel and licenses don’t have this restriction.

      • Anc says

        Interesting. Good find. So according to this AG, the ST Counties could levy a gas sales tax if they so chose, but the State cannot. Less effective than a State Tax (raise it too much and people will drive outside to get it) much less a National or even just State Compact, but it could be a start.

      • Erik G. says

        Isn’t that the same Slade Gorton of Gloucester (cousin of Jennifer Dunn Lumber, mother of MLKC Councilman Reagan who was named for a president…how strange!) who was voted out of office in favor of new thinking?

        Timber/Fishing vs. Information economies, folks. Look it up and study the history of your region!!

        Timber/Fishing almost destroyed the region. Information is saving it.

        The world of 1974 (which should have been aware of the 1973 oil shock) is long gone and 35 years later the 18th amendment needs to be revisited. Not that I have any hopes for this to happen under a Kemper-lacky like McKenna.

      • Greenwood Rider says

        The Lowry administration proposed a sales tax on gas. There’s no reason this could not be done other than the challenge of passing it into law.

        The issue with the gas tax is simply exhaustion. It’s been tried and tried again to raise it – here and across the country – but those who decide what passes as insider knowledge are united that raising the gas tax is politically expensive.

        Kudos to Martin for raising the key issues with a VMT tax. It is similar to a gas tax, but without any incentive to improve fuel efficiency. There are other problems as well — (1) it will be much more expensive to collect VMT taxes than gas taxes are, (2) it is not indexed to rise with inflation so has the same revenue issues as the gas tax, and (3) it will be just as hard to raise as the gas tax is.

        My concern with VMT taxes is that, after huge battle to institute them, we will find ourself with a new tax that has all of the same disadvantages as the current one, without providing the incentive to improve fuel efficiency.

        This is an issue that needs a lot more critical questioning – thanks for raising it.

  1. Bernie says

    Martin, your bullet points are exactly what I thought when I read the headline. Raising the gas tax (or any tax) is never politically popular but the beauty of the gas tax is you don’t really see it. You see the price per gallon but virtually nobody knows how much is federal tax, state tax, etc. The price of gas varies all the time anyway so a couple pennies a gallon is below the noise margin. Now, when gas prices are relatively low would be a perfect time. Plus, drivers realize that this money goes to roads, not buses, not trains, not anything else but roads so there’s less resentment in paying it. It can also be raised in 1/10th of a penny increments so if they pass say a 10 cent cap on the increase and only raise it by a couple of pennies it can be ratcheted up in fractional amounts for years without it ever seeing the light of day.

    • says

      I agree with this point and I love your terminology that a couple of pennies a gallon is “below the noise margin.” I really couldn’t believe the handwringing from gas tax opponents during the last gas tax battle. During the course of a several week long debate over a nickel tax increase,the cost of gasoline changed by 50 cents a gallon or more IIRC.

      • Anc says

        Fuel prices are kept ridiculously low in this nation. However I am not a fan of shock therapy, so a gradual increase over time sounds like a good idea. Even better would be to coordinate this with as many states as possible to decrease the likelyhood of people being able to jump ship. Like the vehicle emissions standards that 14 states agreed to adopt together.

      • Tony the Economist says

        I suppose it might be possible for someone living in Vancouver or Spokane Valley to grab some gas on the other side of the border if they were going there anyway, but seriously, it takes a 1/10 of a tank of gas to travel across the state line to fill up and come back even if you do live on the border. Assuming $3 per gallon, oregon or idaho’s gas tax would have to be $0.30 less than ours in order for it to make any sense to try to cheat, and even if their tax were to be $1 less than ours, only a tiny fraction of Washingtonians live close enough to the border for it to be economically viable and of that tiny fraction, a much, much tinier fraction is actually crazy enough to do it. Really, gas tax cheating across state lines is simply too small an issue to worry about.

      • Anc says

        Tony, I was talking more about people moving out of state. Fact is most states with similar employment opportunities have similar political bents, so if you get them together most people will not just be able to jump ship and avoid the taxes, not if they want to maintain their job.

        Although close to the borders direct tax avoidance might also be a slight problem. The higher the disparity in prices the bigger the problem. Get it high enough and the savings will cover the drive with only a few 5 gallon jugs.

        However if the tax was only a county thing, which it appears it might be the only possibility in WA then that kind of avoidance would be much MUCH more prevalent.

    • Steve says

      Agreed, but we had a lot of hand-wringing from Eymanites about “the highest gas tax in the nation” (not true, incidentally) back four or five years ago when the legislature raised the gas tax 5 cents. Legislators would need a way to make a gas tax not look like the elite balancing the budget on the backs of the common people. (Not that they would be, incidentally, but politics is about positioning)

      • Ben Schiendelman says

        Well, common people in France seem to do okay. We have better transit than many cities there our size.

      • barman says

        What? We most certainly do not have better transit than any comparable cities in France. Please name one. Not to mention that city-to-city transit is far easier and cheaper with SNCF than Amtrak ever could imagine.

        Anyway, French cities are denser, roads are smaller, and cars are just generally more expensive so driving is impractical for a number of reasons.

      • Anc says

        Aye, I can’t speak for France, but Germany has a much better transport even for it’s smaller cities. I lived in Heidelberg which is a small town, only a little larger than Bellevue, but has an extensive street car network, and then a bus service feeding it, and running in areas like the old city where you couldn’t put rail down. Also there was a Strassenbahn (Tram) the 5R that made a big 1:45 or so loop through the Neckar Valley hitting up surounding villages. And by villages a mean only a few shops on the street at the stop, tiny little things. But it came every 15 to 20 minutes, picking people up and taking them to Heidelberg, Weinheim, and Mannheim and to their Main Train Stations. Also it was the only tram that was ACed, and my flat wasn’t either, so I’d just get on and do a loop to have a cool place to do homework. LOL

        http://www.urbanrail.net/eu/vrn/hd/heidelberg.htm

        Begin personal testimony. Skip if it isn’t your thing.

        I used the Strassenbahn everyday to get from my flat off of Handschuhsheim to class (Adenauerplatz), to the Altstadt for hanging out (Bismarkplatz) and a couple times a week to the Main Train Station (Hauptbahnhof) to catch the S-bahn to Mannheim where my friend lived. As someone from bumf*** Alabama where your life was defined by your car andit was an hours drive to city where you actually do anything it was quite an experience.

        I’ve been in love ever since.

        Needless to say I was quite disappointed when I got to Seattle, after all my times and travels in Europe and the only big American cities I had spent alot of time in were Boston and NYC and I was hoping for a similar, if smaller transit system.

      • Anc says

        What if it was wrapped up in Global Warming, Save the (temperate) Rainforests, and Keep Our Rivers Clean (less sprawl = less polluted runoff). Might that work? ;)

      • Bernie says

        Or point out that a 25 cent fare increase costs someone commuting by bus $125 a year just to get back and forth from work. If you drive 12,000 miles a year (that’s a lot more than most people’s commute> and your car gets 24mph the cost of a 25 cent per gallon increase in the gas tax works out to $125 a year.

      • Bernie says

        That of course should have been 24mpg, not 24mph. But 24mph during peak commute would be an improvement in a lot of places; like say the HOV lanes through Bellevue :=

      • Tony the Economist says

        If we actually wanted to decrease congestion, decrease VMT, increase social equity and generally make everyone’s lives better we would lower transit fares to zero, or some nominal amount just high enough to discourage frivolous travel.

        Would it cost hundreds of millions of dollars per year? Yes. Would it increase transit ridership about 20x as much per dollar spent than building light rail? Yes.

        Transit fares are an unimaginably wasteful policy based primarily on racism (white people resenting the idea of giving primarily black bus riders a “free ride”). Most transit agencies spend more money collecting fares than they actually make off of them.

      • Martin H. Duke says

        Tony,

        I’m really doubtful that’s the case. In many cases the bus is already cheaper than driving, and fares are subsidized by employers and the tax system. I think the big deterrents to transit use are pedestrian design, convenience, and quality of ride — issues that light rail is meant to address.

        The case where transit is clearly not cheaper is the two-mile hop to the store. There, the cost of driving is nominal and the time required to walk to the stop and wait for a bus overwhelms everything else.

        Not having fares at all does make things more convenient, although it also encourages the “rolling homeless shelter” phenomenon that makes riding unappealing for many people.

        Of course there’s some price sensitivity, but I don’t think nominal fares would solve many problems.

  2. justin says

    Gas tax should be higher, and tied to inflation. All this harping for a few cents a gallon is crazy in the midst of exxon making billions a quarter, not to mention overseas crazies.

    • Chris Stefan says

      Lots higher, like enough to raise the price of fuel to what it is in say France, Germany, or Sweden.

      • Anc says

        Gradually yes, however it must be over the course of years. You are talking about a 3 fold increase. Done too quickly and the shocks would make this current recession look like the roaring 90s. The economy would suffer a complete meltdown. Complete.

      • Tony the Economist says

        That actually depends on what you do with the revenue. If you used the revenue to reduce sales or income taxes by an equivalent amount the overall effect on the economy would be minimal. Yes, people would move quickly to make substitutions, but it would not put the economy into a meltdown. Even the government spent the money rather than rebating in through reductions in other taxes, the jobs created by the expanded government spending would boost the economy even as the gas tax depressed other sectors.

        In fact, a rapid increase in the gas tax might actually be a good thing for the economy, as it would give people a huge incentive to spend lots of money investing in ways to reduce their VMT. Demand for new, fuel efficient cars would skyrocket.

        Politically, it would be a loser. Economically, it would be somewhere between a non-issue and a boon depending on how it was implemented.

      • Anc says

        I disagree, our entire system is built around cheap petroleum, take that away and the system collapses.

        Food prices would skyrocket until we moved away from our current specialized, industrialized food system into a more localized diversified production and distribution system. Something that can’t be done overnight.

        Everyday consumer items would skyrocket as the price for shipping increased 3 fold if not more. Until more rail capacity could be built, something that couldn’t be done overnight.

        Home prices in the outlying suburbs would plummet as the cost of living there would rise substantially. You’d be looking at the housing bubble all overagain. Also your rent and home prices close to employment centers would skyrocket until more capacity could be built, something that couldn’t be done overnight.

        Our entire lifestyle is structured around cheap fuel, you take that away without giving the economy YEARS to restructure, and that is a recipe for disaster. I’m talking food riots, unemployment and homelessness rates going through the roof… it would not be pretty.

      • Chris Stefan says

        Anc,
        I’d rather the price increases came via taxes rather than sudden oil shocks. At least fuel taxes could be put toward building alternatives and would discourage consumption. Europe functions just fine with much higher fuel prices than the US.

        Realistically in Washington we’re more likely talking about a modest increase in the excise tax on fuel (with perhaps automatic inflation indexing added on). If we’re really lucky we’ll also get the sales tax extended to fuel sales which won’t be restricted to only highway uses.

      • Anc says

        Chris, I don’t disagree with that at all, and in fact am an advocate of gradual increase of oil taxation to European levels. All I am disagreeing with is a policy of ‘shock therapy’ where we radically increase the price without giving proper time for the economy to adjust.

        You’ve got to realize that our entire way of life, everything from where we live, to what we eat, to how we get our goods, is based on the assumption of cheap fuel. Take that away too quickly and you have a recipe for disaster.

  3. Mathew "RennDawg" Renner says

    I do not think that the gas tax will be raised for one reson. 2010 is an election year. No one raises taxes when there re-election is at stake.

  4. Erik G. says

    It’l be fun watching the gas tax revenues dry up when gas is $10/gallon next year and more and more people are driving electrics or Natural Gas vehicles in the coming decade.

    The Highway Trust Fund was bankrupt last summer folks. Wake up!!

    • barman says

      You’re crazy if you think gas will be $10 a gallon by next year. Maybe you’re not aware how many barrels of oil the US has in reserve? A spike of gas prices that high would create absolute chaos and the government is smart enough to never let that happen.

      I support higher gas taxes to pay for transit but seriously, this zealotry is alarming.

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