We ask a lot of the gas tax. We expect it to build new roads, keep our bridges from falling down, and fund a variety of public transit projects. As if that weren’t enough, we also want it to clean up the world, discourage fuel consumption, and curb air pollution. All these goals are related, of course, but not always in a helpful or consistent manner. It’s time to find a better way.
When it comes to funding infrastructure, the federal gas tax is failing. For decades, the levy raised enough money to pay for innumerable surface transportation projects, including the interstate highway system. But since 2007, it’s been falling short. So short, in fact, that the federal Highway Trust Fund is constantly on the brink of exhaustion.
Three factors explain the failure of the gas tax. First, road building has gotten more expensive. Over the past 20 years, construction costs have risen by more than 50 percent. Second, Americans have been buying less fuel because their cars are getting better mileage. Third (and most important), Congress hasn’t raised the gas tax in more than two decades. Currently, gas is taxed at 18.4 cents per gallon and diesel at 24.4 cents, just like they were in 1993.
This suggests a stunningly obvious solution to our current problems: Just raise the tax! And indeed, plenty of people have suggested just that, not all of them big-spending liberals. Business groups in particular have been pleading for an increase for years, and some traditionally antitax Republicans have been receptive. Currently, one of the leading proposals for fixing the trust fund is cosponsored by Tennessee’s GOP senator, Bob Corker.
Still, politics have managed to get in the way of sensible solutions. Corker doesn’t enjoy much company in his caucus when it comes to raising the gas tax, and even many Democrats are wary of raising a tax that plenty of voters truly detest. As Rep. Earl Blumenauer remarked to The Washington Post in July, “Gasoline is the only product that we price in real time. The typical American sees the price of gasoline about five to 20 times a day.” That makes for a lot of price – and tax – sensitivity.
Nevertheless, raising the gas tax is a good idea. It’s a short-term fix to an immediate problem. But it should really be the first step in a longer process of revamping the way we pay for transportation infrastructure. For almost 100 years, lawmakers across the nation have treated gas taxes as a user fee; since fuel consumption was roughly correlated with road usage, gas taxes were a good way to ask drivers to pay for the roads they needed.
But that rough correlation gets rougher all the time, thanks to mileage improvements. If we want to keep paying for roads with a user fee, we need to find a new way to measure use. Improving fuel efficiency is a great and wonderful thing, but hybrid drivers are still using the roads. In fact, to the extent that they pay less to drive each mile, they may even be using roads more than people driving traditional gas-powered vehicles.
To better correlate road use with tax payments, lawmakers should consider some sort of vehicle miles traveled (VMT) tax. The levy would presumably be administered by installing a GPS device on vehicles, which would allow tax authorities to easily calculate taxes due. The levy might be assessed at a flat rate, or it could also be imposed with variable rates depending on vehicle weight or other factors.
This sort of levy is not without its own problems. To my mind, the biggest hurdle is political: It’s hard to imagine that Americans will be happy about giving the feds 24-7 information on their whereabouts. The Congressional Research Service came to a similar conclusion, quoting a 2009 Florida newspaper editorial to make the point:
- It’s not the government’s business to know about everyone’s whereabouts. A VMT pilot program in South Florida will use a tracking device to log drivers’ mileage. Impose the VMT, and Big Brother, for all intents and purposes, will be in the back seat. Tracking your comings and goings isn’t akin to installing cameras at intersections to catch red-light-runners who threaten anyone’s safety, an effective measure we heartily endorse that saves lives. It’s a gratuitous intrusion into drivers’ lives. And an intrusion that policymakers need to steer clear of.
I sympathize. But truth be told, Americans already tolerate plenty of privacy intrusions. In particular, they routinely provide location information to both government agencies (through their E-ZPass devices, for instance) as well as private companies. Google certainly knows a lot about our driving habits, and cellphone companies are privy to almost all our darkest secrets.
I don’t particularly trust the government with my private data (thanks for the heads-up, Edward Snowden). But then neither do I trust private-sector snoopers – especially since the latter have a strong profit motive to ignore my privacy concerns.
But ultimately, privacy may be an anachronism—a quaint memory from our childhood, like Howard Johnson’s restaurants. We can wish for an earlier age of liberty, freedom, and highway anonymity. But there’s no turning back the clock. Realistically, we should spend our time figuring out how to live with a loss of privacy, not wishing for a bygone era.
The gas tax has had a pretty good run. But it was built for a different age, when electricity was for light bulbs, not Lamborghinis. It’s time to find a new, more effective revenue tool for our energy-sipping future – something like the VMT tax.