Obama’s Secretary of Transportation Ray LaHood opened up the possibility of taxing drivers by vehicle miles traveled (VMT) in the future rather than taxing drivers at the gas pump. Taxing by VMT is a pretty progressive idea, though it would require a large investment in GPS trackers and other technology. A progressive suggestion like that from LaHood — and a recognition of the failure of the gas tax to sustain our highway investments — is encouraging, no? Well, within hours a spokesman for the Department of Transportation — LaHood’s employee — and the White House distanced themselves from LaHood’s remarks: “It is not and will not be the policy of the Obama administration,” said Robert Gibbs, the White House Press Secretary.

Of course that same link has other statements worth considering. “Most transportation experts see a vehicle miles traveled tax as a long-term solution[.]” “The gap between money raised by the gas tax and the cost of maintaining the nation’s highway system and expanding it to accommodate population growth is forecast to continue to widen.” “A blue-ribbon national transportation commission is expected to release a report next week recommending a VMT [tax].”

A VMT tax would be a sort of radical change — one that could require millions of cars to be retrofitted — with privacy implications, but how can we fund our surface transporation infrastructure without a radical change?

I think most environmentalists would prefer a VMT tax, but some have made the point that a VMT tax would charge the same regardless of how much gasoline a car burns. That is true, and perhaps a VMT tax should be in addition to the gas tax (perhaps a lower gas tax). But a gas tax isn’t just a free to use gas, it’s a fee to use our public roads. Having electric or hybrid cars pay for their share of the transportation grid makes sense. Charging additional VMT taxes on heavy trucks that damage the roads more — well, that makes sense too. But charging a gas tax on one hand, and mandating that cars use less gas on the other — that’s good for the earth but a very bad way to fund roads and transit.

The Obama administration would do well to listen to its Secretary of Transportation and not rule out possible solutions years too early.

33 Replies to “LaHood Proposes Taxing VMT, Admin. Backs Away”

  1. Shouldn’t this post somewhere mention that we need to start scaling back funding on roads? Plus, your assumption that this fee can be used for roads “and transit” is a large one – trying to convince SOV drivers to pay for buses will be difficult.

    (oh, and I know you don’t have control over the advertising, but there’s a “Protect American jobs – save the F-22 Raptor – sign the petition” advertisement on the page right now. Talk about a waste of both fuel and taxpayer money…)

    1. In fact, my assumption is current policy with the gas tax. 15.5% of the gas tax is used to fund public transit.

      I don’t think talking about a major de-investment in roads infrastructure is realistic or even a good thing. First, we need to continue to maintain our infrastructure and keep it in good shape. Second, cars are going to around for a very long time particularly outside of urban areas.

      1. I tend to agree with you on keeping our roads in good shape. They will be relied on to handle the vast majority of all trips for decades to come.

        It’s an easy arguement to make that cars should pay ‘full share’ of their expenses, without all the hidden subsidies, and a per mile tax certainly accounts for wear and tear on the roads — the more you drive the more you pay.
        But now that oil has hit it’s peak, and will only continue to become more expensive, it also follows that driving more will cost you more, both in gas tax, fuel and maintenance cost, insurance, depreciation, etc. That’s a major incentive to purchase vehicles with higher fuel ecconomy, or just shift to public transportation. As vehicle drivers make up the vast majority of all tax payers, I wonder just how the tax burden would shift, if VMT tax is on egual footing with a per gallon tax.

        Any radical change in the tax structures could have unintended consequences. Less money for transit is at least a possible outcome of too much tinkering.

      2. I hadn’t known about the 15.5% thing (note: this is only 15.5% of federal taxes – state taxes go only to road building). It makes a lot of sense to pay for transit with gas dollars, since it decreases the number of cars on the road and is cheaper than building more road capacity.

        I think we’ve had this debate before, but I’d like to see us maintain our bridges but shrink our roads by replacing fast lanes with rail. Peak oil is real and will hit us soon.

        “cars are going to around for a very long time particularly outside of urban areas.” Really? I would guess that cars will only be around for a very long time around urban areas. Long-distance driving is difficult and expensive using batteries. Biofuels are a non-starter unless we make major breakthroughs, since it now takes about as much fuel to grow your feedstock as it produces.

      3. In the next 10-20 years, battery technology will grow by leaps and bounds, just like it has in the last 10-20. Some day we will have batteries w/ the same energy per cubic unit as gasoline. The 2/3/4 wheeled vehicle is here to stay for a long time whether powered by electrons or a liquid. Think BIG picture Mr Engineer.

        I do agree with the fast lane to rail conversion.

      4. There was an Extreme Engineering show on Russia’s Sakhalin Island natural gas drilling and processing platforms (LNG). Natural gas will prolong the era of the fossil fuel enconomy for a long time to come. Southern California seems to be the only place using the technology to reduce diesel emissions from rail operations.

        BNSF Debuts Natural Gas Hostler Trucks to Reduce Emissions at Nation’s Busiest Rail Intermodal Facility

        Note the little factoid near the bottom that BNSF carries enough coal to produce 10% of our electricity. Until electricity comes from nuclear electric cars and trains do little to decrease the world consumption of fossil fuels. Brazil manages to create ethanol from it’s large sugar crop but the US Bio Diesel from corn and soy were never sustainable.

        According to Green Car 20% of all new orders are for buses powered by CNG. As crude oil gets increasingly expensive to recover (the easy stuff has largely been sucked up already) natural gas will start to replace diesel.

        Israel vows to introduce electric cars by 2011

        The neat thing about the Shai Agassi plan is that it is based around a distribution network where you have the option of exchanging battery packs if you don’t have the time to recharge. It’s not a plan that’s geared at long distance driving but for some markets (like Hawaii) it can work.

  2. On the news this morning they were talking about this at the state level. Not Washington State, it may have been Massachusetts? We already record milage when a car is sold or you get emissions testing done so there’s really no need for the GPS other than collecting on a more regular basis. It could be handled the same way some people have to pay estimated federal income tax. That raise the question though of how/when would you get billed and pay this VMT tax?

    Still, if the need is more funding why not just raise the existing tax? Having an incentive for buying fuel efficient vehicles is a good thing. It also encourages transit as was seen during the last spike in gas prices. We’re a long long way from electric or even hybrid cars taking over and during a change over is exactly when tax incentives should be used.

    1. It’s worth mentioning that if gas prices were affected by cap and trade there would be much incentive to have more efiicicent cars. VMT tax also drives folks to transit, particularly for long commutes.

      1. What’s worse for the environment? long commutes or a short trip on highly congested roads? length of travel or the efficiency/weight of vehicle driven? Taxing the energy that someone uses makes more sense to me than taxing how far they go. The energy for hybrids and electric vehicles have to come from somewhere.

      2. Yeah, a carbon tax or a cap-and-trade system effectively seek to limit that energy. But the question is how can we sustain the highway trust fund as vehicles get more and more dependent or switch to non-fossil fuels, such as plug-in hybrids? Those awesome electric cars still drive on roads and they should pay for them.

      3. What about folks transitioning to cycling? Imagine VMT for cyclists… Cycling to work instead of driving is unpaid use of roads.

        In the end, I think raising the gas tax and finding a way to tax-for-infrastructure electricity is a better, cheaper short term solution to funding infrastructure.

      4. How in the world would you ever enforce VMT for cyclists?

        Besides, cyclists *decongest* roads (translation: lower maintenance costs), use no energy, and have no harmful emissions (as long as you’re not riding behind them after a stop at Taco Del Mar). Why would you want to deincentivise such a green mode of transportation by taxing it?

      5. re: Zelbinian. Exactly, but by the same argument why tax anything else other than gas consumption. Why ‘deincentivise’ electric, hybrid, or clean diesel with VMT?

  3. If this was implemented, it’d be better to have someone take a reading say when you get your car tested for emissions or something like that rather than have GPS. There’s too much potential for abuse of the system with GPS devices in every car.

  4. When was the last time the feds raised their gas tax?

    We already have the infastructure to raise it, we just need leadership.

    There is no way I would be ok with a gps tracking device in my car, I don’t trust the gov to do it right.

    1. As noted above, there’s no reason not to just do this with odometer checks when you get your tabs.

      We can’t raise the gas tax. We keep trying, it keeps getting shot down. Reps and Senators do like their jobs – that’s a career limiting move.

      1. Amen. Whenever you go to renew your registration, they can just take note of the mileage driven and apply that to your tabs or something like that. I would prefer an algorithm that charged a fee based on total estimated emissions as a result of miles driven, but details like that are not in the works at all yet.

  5. Taxing VMT via GPS could technically has an excellent opportunity to tax vehicles by type of road their on, type of day, and the road congestion. However, this seems like a large amount of infrastructure and an invasion of privacy. The gas tax is much easier to collect and only needs to be raised.

    Ultimately we’ll need new sources of funding for roads and transit. Land use/development has to enter the picture.

      1. Not much. Fuel price fluctuations do more.

        But there’s more to this. When fuel prices are low, people make choices that lock them into consumption for significant future periods of time – like buying a car, or buying a house in the suburbs. When prices go up later, it hurts, but our brains don’t really predict that way.

        With a VMT tax, gasoline conservation happens through limiting sprawl. I suspect it’s actually more effective in the long run – a marginal increase in the price of fuel doesn’t do much when fuel is $4/gallon, but choosing to work closer to home because you pay based on your odometer reading can result in you living in a place where you take more walking trips rather than driving trips.

    1. And time of day, road you’re on is handled by “Good to Go” type electronic tolling. That even has the advantage of dynamically adjusting the economic incentives on real time data. And I think it’s also the most tamper resistant method of charging for VMT.

      One really big advantage of electronic tolling is that you’re actually selling something rather than just “taxing”. If you buy in to the idea of “progressive taxing” being good then charging for the Lexus lanes makes sense. It sort of balances out the somewhat regressive nature of the gas tax. That being that the wealthy can afford the Prius and pay less gas tax than the blue collar worker left driving an old Crown Vic.

      The big brother arguments aside though. I’d be all for my cell phone being the electronic toll collector and ORCA type bus ticket. If folks are really worried about the government tracking them a market for paid by cash anonymous cell phone like access points would be easy to implement. I’ve read where it eastern europe cell phones have become like debit cards to do things like buy pop from a vending machine.

  6. The ONLY reason that gas taxes (motor vehicle fuel taxes) have not kept up with inflation and need is that legislative authorities have neglected to keep those taxes adjusted upwards from time to time. Periodic increases to account for inflation and improved fuel mileage would allow revenue-per-driven-mile to be held constant.

    If that had been done since the 1960’s, we wouldn’t have all this talk about failing bridges and so forth. And funding road infrastructure via such increased gas taxes means that drivers of Hummers and Suburbans pay more per mile driven than I would in my Prius. The gas tax is a Green tax, certainly more so than a VMT tax, billing every driver a flat rate per mile, regardless of vehicle driven.

    1. Legislative authorities don’t do it because their constitutents don’t want it. Remember I-912? It’s only very recently that I-912 wouldn’t have passed.

  7. Lahood’s idea has a dismal history. It didn’t come from any of the hi-falutin ideas we’ve read here.

    Motorists in Oregon bought cars that got good gas mileage. Fuel tax revenues dropped. Legislators decided maybe taxing miles traveled would be a good way to tax those wiley fuel-efficient drivers. After all, you wouldn’t want anyone using less gas or emitting less carbon, would you?

    This is the kind of legislative sausage that makes us vegetarians.

    And BTW, fuel-efficient cars don’t wear out the roads as fast. The best, and almost the only road to fuel efficiency is to make the car lighter and the engine smaller.

    1. Road wear is mostly trucks. The difference between wear from a 3000 lb vehicle and a 5000 lb vehicle is negligible when you also have 50,000 lb vehicles. That’s why we have weight fees.

      I strongly disagree with your characterization of legislators. We have roads, we need to maintain them, what else would you do if your revenues dropped dramatically, but usage didn’t? You would do the same in their position.

  8. I think this is a great idea but needs to be simplified. Just read the odometer when you get your tabs renewed or when you sell the car (which you do anyways). GPS is a great tool but is expensive to operate and is somewhat prone to error. It requires a new agency to manage, too. It could also be easily thwarted. Just unplug the antenna during a long road trip and safe a few bucks!

    Recommend including a flat fee based on 10,000 miles per year to the existing annual registration renewal fee. If you drive more than 10,000 miles, you pay extra for the additional miles. If you drive less than 10,000 miles, you get the same rate subtracted from your registration bill. The mileage would have to be verified by an employee at the office. If it is during a sale, the new owner should also sign off on the miles.

    This is a simple, effective system that requires no new employees or infrastructure.

  9. A VMT tax would be a sort of radical change — one that could require millions of cars to be retrofitted — with privacy implications, but how can we fund our surface transporation infrastructure without a radical change?

    Precisely. I’m not fully convinced with the idea of a VMT tax, but I’m alright with it. I’m a very private person but I’m not paranoid enough to think that the government will be tracking my every move using GPS… Still, for the administration to swiftly get rid of the idea is a little wrong to me. Wasn’t the President the one who urged for fairness, change and bipartisanship? I still support him, I’m just doubting a bit on that judgment call.

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