The Vehicle Miles Driven Tax is Coming — Just Not to Virginia

Virginia’s policy for funding roadway maintenance and construction — adopting a miscellaneous grab-bag of taxes, fees and fines — is increasingly out of sync with the rest of the country. USA Today reports that early next year, six other states will begin testing a new fund-raising mechanism: charging motorists for the number of miles they drive instead of the amount of gasoline they consume.

Researchers from the University of Iowa Public Policy Center will install computers and satellite equipment in the vehicles of 2,700 volunteers — 450 each from Austin, Baltimore, Boise, San Diego, eastern Iowa and the Research Triangle region of North Carolina.

Over the next two years, the drivers will get sample monthly bills for the number of miles they’ve driven. They can compare what they now pay in gasoline taxes with what they would have paid in per-mile fees.

As Americans embrace hybrid technologies, with electric vehicles and fuel cells looking increasingly likely in the future, there is increasing awareness that the gasoline tax is not a stable long-term revenue source. In other news, USA Today reports:

• Oregon this year finished a year-long experiment that tested a “virtual tollway” system that could eventually replace the state gas tax with a road-user fee. Volunteers drove vehicles equipped with state-installed Global Positioning System (GPS) devices and odometers that kept track of the miles they drove. When they gassed up, the drivers paid for their gas as well as 1.2 cents for each mile driven since their last fill-up; they did not pay the 24-cents-a-gallon state gas tax.

• Minnesota Gov. Tim Pawlenty says part of his state’s plan for dealing with declining gas tax revenues is a mileage tax or fee. He wants a test project this year.

• Colorado Gov. Bill Ritter appointed a 32-member commission in March to explore long-term options, including mileage fees.

Virginia can still do these states one better. Instead of using a Vehicle Miles Driven tax to raise revenue for all types of transportation programs, including new construction, use it to pay for maintenance only. That way, the tax becomes a direct user-pays system. You want to drive? Fine, you need to pay for your car, your gasoline, your insurance, your repairs… and the wear and tear you put on the roads. (There are other mechanisms, as I have discussed ad nauseum, for funding road construction and coping with traffic congestion.)

I don’t see how any rational person can object to such a system, other than the grounds that, “I don’t want to pay, I want someone else to pay. I want a free ride.” Once upon a time, we could afford such an attitude, but we can’t any more.

(Hat tip to Ted McCormack for pointing out the USA Today article.)


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5 responses to “The Vehicle Miles Driven Tax is Coming — Just Not to Virginia”

  1. Norman Leahy Avatar
    Norman Leahy

    Jim,

    Allow me to be irrational, or at lest cynical.

    While the concept you describe seems interesting, I cannot think what the incentives would be for Virginia politicians to abandon the revenue sources they currently tap for roads in favor of this hard-core user pays system.

    If anything, the inclination would be to keep the other taxes in place and impose this new one on top of them.

    Ahhh…I’m just being too cynical.

  2. Larry Gross Avatar
    Larry Gross

    no.. not cynical enough…

    On a scale of 1 to 10 in terms of legislative action (significance and difficulty) this is a 9.

    We’re going to tell folks in Va that we are going to “track” their driving habits … with a state-controlled gps device…

    we’re gonna tell that guy in Farmville who drives a beat-up 1963 Ford Pickup to report to the DMV to have his device installed…or we’re gonna send the Sheriff and/or State Police after him….

    ha ha ha ha ha ha ha ha and … HA

    right.. … when pigs fly – perhaps

  3. Okay, how about this objection –

    What, why and how are the miles put on? In my job I travel from job site to job site. There are weeks that I’ve put over 500 miles on my truck and none of it is for pleasure. Jack up my costs of traveling and the cost of my service goes up, way up. Should there be a difference between pleasure miles and miles necessary to do certain work?

    As for paying their own way, we should enact this as soon as the subsidies to ‘mass transit’ are cut off and THOSE riders pay what it really costs. In Portland we have light rail, it costs $2.00 to ride it – the true cost is $20.00 per ride but $18.00 of it is subsidized by taxing EVERYONE regardless of if you use this antiquated, slow method of travel or not (less than 5% of the population uses it on a regular basis). We have streetcars which don’t cost anything to ride but the actual cost is over $10.00 (depends on how far you ride it) – again it is totally funded by tax subsidies. We have a ‘heavy rail’ train that goes from Eugene to Portland (and back) every day. It costs riders $20.00 for a one way ticket, true cost $92.00

    When all transportation is paying it’s true costs, come ask me about the price per mile tax. Until then, I’m subsidizing the heck out of some very little used ‘mass transit’ boondoggles and I don’t like it.

    Fair is fair, and right now all the money being pushed into mass transit is NOT fair. No, I’m happy with the way things are, because if it became truly fair, mass transit would die (not that that would necessarily be a bad thing when you look at what it’s become).

  4. Jim Bacon Avatar

    Accurate, Here’s how I would respond to you. You already pay more for road maintenance/ construction through the gasoline tax. The Vehicle Miles Driven tax, with adjustments for curb weight, might cost you more, but not a tremendously large amount more. Even if you do pay more, how can you object, other than on the grounds of, “I don’t want to pay my share, I want someone else to pay for me”?

    As for mass transit, I agree with you. Many mass transit projects are a boondoggle. I still think mass transit can play a useful role in our society, but we have to approach it very differently. First, the landowners whose property increases in value from location near transit stops should help pay for the up-front capital costs. That can be done through what we in Virginia call Community Development Authorities and through Tax Increment Financing. Secondly, we need to deregulate local transit monopolies and create a true free market for shared ridership vehicles (vans, buses, etc.). Third, we need to relax zoning restrictions that make it impossible to develop density around transit stops. Unless we are willing to do these things, “investing” in mass transit will be pouring money down a rat-hole.

  5. Larry Gross Avatar
    Larry Gross

    I find this an interesting policy question.

    and it goes something like this:

    “If someone does pay for ALL the costs for their personal mobility – should government still penalize it?”

    Ditto for Business Mobility. You want overnight delivery? You got it – for a price. I don’t see UPS or Fed Ex going belly-up because of increasing transport costs).

    So.. if you look at the money the state gets from the gas tax.. not all of it is plowed back into infrastructure for personal mobility (roads) but rather diverted to mass transit…

    And .. if you look at the plans for HOT lanes… much of that money is destined for mass transit also.

    But.. if we have tolls that start to approach the true per person cost on mass transit – and folks choose road tolls.. then what should public policy be if people still prefer to pay road tolls?

    Of course.. at some point.. the population growth in NoVa/Wash Metro and Exurbs will increase to the point that road tolls will far exceed the per rider cost of transit….

    at that point.. let’s see.. it will cost $40 to drive to work.. and $38 to take metro… 🙂

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