Clifford Winston, author of the forthcoming book “Revitalizing a Nation: Competition and Innovation in the U.S. Transportation System” has a fascinating essay in The NY Times. (Link through the paywall below.)
The country’s road system receives much of its funding through a tax on gasoline, and the Infrastructure Investment and Jobs Act and the Inflation Reduction Act have allocated billions of dollars of additional federal spending to improve our highways and to subsidize the purchase of electric vehicles. In theory, both new laws should help address climate change. Newer roads should reduce stop-and-go traffic, which increases emissions, and electric vehicles will eventually slash motor vehicle gasoline emissions.
But in reality, building smoother and wider roads often incentivizes more, not less, driving. And of course, more driving means more pollution, more accidents, more congestion and more pavement damage. At the same time, the gas tax revenues providing highway funding will dwindle because of electric vehicle adoption.
The good news: Buried in the 2,700 pages of the Infrastructure Investment and Jobs Act is the money to test a simple, relatively inexpensive and far better way to fix many of the woes of our congested, crumbling and climate-unfriendly highway system.
Known as a vehicle miles traveled (V.M.T.) fee, it would charge drivers for each mile of their use of the road. In doing so, it can incentivize us to drive less often, to avoid peak travel periods and to drive less-damaging and less-polluting vehicles.
The problems with fuel taxes
Winston points out fuel taxes are not sufficient to maintain our crumbling road system. More fuel efficient vehicles have reduced this revenue, and electric vehicles will only make the problem worse. We’re not talking about small numbers here:
...the annual costs of accidents, congestion, vehicle pollutants and pavement damage have exceeded a trillion dollars.
It’s not just about paying for maintaining our current roads either. Plans to expand and upgrade highways have the paradoxical effect of making traffic worse — bigger roads draw more vehicles. (It’s called induced demand, and it can metastasize out of control.)
The gasoline tax AKA Fuel Tax is a practical attempt to cover the costs of building and maintaining roads by taxing the fuel needed to travel them. Traveling more means burning more fuel, so it makes sense. It’s problematic in several ways though.
As pointed out, those revenues drop as vehicles become more fuel efficient — even though they may be generating as much or more wear on the roads. (And better mileage may encourage people to drive more.) Electric vehicles aren’t paying a fuel tax at all.
There’s also the issue of weight. Some vehicles do far more damage to highways because of the loads they put on them. Fuel taxes don’t take that into consideration. There’s also the political demands that can lead politicians to declare a holiday on fuel taxes when rising gas prices create public pressure to “DO SOMETHING!!!”
But, there’s one feature of fuel taxes that makes them practical. They can be applied at the pump pretty much automatically, without having to set up toll booths or electronic tolling mechanisms. It’s a low-tech solution which is why it was adopted in the first place.
Why the V.M.T. approach makes sense
We now, as Winston notes, have the technology to do better.
By focusing on miles driven, the V.M.T. fee can be fine-tuned to address all the social costs associated with driving. It can be increased during peak travel periods and in more populous areas, reducing congestion and improving safety. It can be varied depending on how green (or not) the vehicle is and can charge drivers according to the pollution their vehicles emit.
And it can be designed to reduce the considerable damage caused by heavy trucks. The gas tax encourages truckers to improve fuel efficiency by relying on vehicles with fewer axles — which increases road damage. A V.M.T. fee can be varied depending on how much weight is being borne by each axle, which reflects the road damage trucks inflict on the pavement.
Advances in technology make a V.M.T. fee for cars and trucks feasible; a mobile device can be installed on all vehicles that can track time, location and mileage, and the information can be sent to administrators who send confidential charges to road users. As for privacy concerns, many of us are already using a similar technology to pay highway tolls.
Establishing a V.M.T. fee would achieve the government’s goals for much less than those large spending programs. The congestion charge would spread traffic throughout the day, reducing public pressure to build expensive lanes or roads to expand peak-period capacity. The axle-weight charge would reduce pavement damage, decreasing maintenance expenditures. And the emissions charge would encourage travelers to use electric vehicles, accelerating the transition to a clean energy economy without large subsidies.
Why making sense is not enough
Obviously, the trucking industry will resist this tooth and nail and will lobby against it — as it means they may end up paying more to match the damage they do to roads. So will companies that rely on trucking to support their operations, like Walmart with their mega distribution centers.
The paranoid Right will claim this is a deep state conspiracy to track the movements of Americans everywhere, all the time. (Anyone with a cell phone is already carrying a tracking device; anyone using an EZ-Pass is already creating a government record of their travels.)
People in flyover states will claim they’re being penalized because they have to drive long distances just to get anywhere. (They’re already being penalized by fuel taxes.) Congestion charges will anger people who must drive at particular times of day.
Localities that are counting on fuel tax revenues to balance their budgets are going to be concerned over how V.M.T. revenues will be shared. Will they be winners or losers? Does this effectively nationalize taxing driving, or will it still be applied through various levels of government?
Politicians will have to find ways to reassure people they’re not going to pay more, that it will be fair, that the government won’t be coming for them, that this isn’t going to be some new burdensome regulation. They’ll also have to make it fool-proof, so that people will be able to trust they’re not being overcharged or spied on — and so that hackers can’t evade it or run up charges on someone else’s tab.
And, there’s always bureaucratic inertia and cowardice. Winston notes that there seems to be no rush to put pilot programs in place.
Spoonful(s) of sugar to help the medicine go down
IF we are going to change to a V.M.T. system, the idea must be sold to the public on the basis of things that they can personally appreciate. It won’t happen without effective messaging. (One of which is referring to it as a fee, as in user fee, not a tax.) Here’s some suggestions:
- A V.M.T. will be a fairer way of paying for highway usage — roads aren’t free. Those who make the most use, those who put the most strain on highways will have to pay their fair share. Does it really make sense to incentivize ever heavier tractor-trailers or tandem rigs?
- It will make it easier to make sure highway funding dollars go to where they are needed. This kind of data will make it possible to get a better idea of when and where the highway system is being stressed and take appropriate steps.
- It will incentivize people to make more use of mass-transit, reducing congestion, reducing air pollution, and reducing energy use.
- It will incentivize moving traffic from highways to railways, again reducing traffic congestion, reducing air pollution, and reducing energy use. (We could do more — see Solutionary Rail.)
- It will affect development patterns. When there’s a perceivable cost to driving miles to get to a big box store, having more nearby local shopping choices makes sense. It makes mixed-use neighborhoods more practical when people have an incentive to live closer to work and services.
- Replacing fuel taxes makes fuel price variations more clearly a function of industry machinations — and removes the temptation for local governments to compete against each other over those taxes.
- It will allow people and companies to budget for transportation costs more effectively. When someone can log into a secure government website and see how much driving they are doing and how much it costs, they can make better plans and develop strategies to bring those costs down.
In addition to the above budgeting advantages, it’s possible to go even further. Given reliable data on actual miles driven and the kind of driving being done, it should also be able to figure out how this affects car insurance — as in lower rates for optimized driving choices. It should also make it easier to figure vehicle depreciation and budgeting for maintenance. It’s not hard to picture this as some kind of app.
Cars are already filled with computers. If a driver had the option of seeing all of the costs of that commute to work or that drive across county to that big box store, as though a taxi meter was running, that could be a game changer as far as the way people approach driving now.
It’s entirely possible people don’t want to know the total costs of driving a car in real time; ignorance is bliss. Still, it’s hard to believe that having that information available would not cause people to rethink their driving habits and America’s addiction to car culture. It just might be what people need to be willing to invest in transit and more sustainable development patterns.
What do you think?
More reading:
Here’s a wikipedia article discussing the V.M.T., where it’s being used, and how it’s going over.
Here’s a look at Fuel Taxes and V.M.T.s from a trucking industry publication.
Here’s how the “business-friendly, center right” Tax Foundation looks at the matter.