Mileage-based user fees can replace outdated federal gas tax

Since the nation began building roads, it has been widely accepted that the drivers who use them should pay for them. That was the foundation of the federal gas tax since it was created. Drivers bought fuel, paid the per-gallon fuel tax, and the money was supposed to go toward maintaining and improving the roads and highways they used. Drivers who used roads more paid more in gas taxes, and it largely worked for decades.

However, the federal fuel tax hasn’t increased since 1993. Thirty years of inflation have significantly eroded its purchasing power. If lawmakers had indexed gas taxes to inflation, charged electric vehicles a fee equivalent to the taxes they’d pay to use the roadways, and prevented the siphoning off of gas tax revenue from roads to pay for things like walking trails, parks, transit, and economic development projects, the gas tax might survive a while longer. However, with today’s political dysfunction and out-of-control federal spending, those fixes are extremely unrealistic.

As a result, the gas tax is like an aging rock star on a farewell tour. It is still around, but with the growing number of electric, hybrid, and more fuel-efficient vehicles, it is quickly becoming less effective and outdated. Some hybrid cars now get more than 50 miles per gallon, and electric vehicles don’t pay fuel taxes at all, yet they cause similar wear and tear as other vehicles that pay more in gas taxes.

America’s roads need a dedicated, reliable revenue stream to repair and modernize. Reason Foundation’s Annual Highway Report recently found that more than 42,000 bridges are structurally deficient. A dozen states have more than 5 percent of their urban highway pavement in poor condition. Thirty-one states have rural traffic fatality rates of more than one death for every 100 million miles driven. These issues must be improved. The gas tax, increasingly unsustainable as a funding source, worsens the nation’s infrastructure problems.

Some are calling for an annual vehicle weight fee, but that wouldn’t reflect actual road usage and would allow large trucks, which place the most stress on the road system, to pay less than their fair share.

The best path forward is to replace fuel taxes with a mileage-based user fee, or road user charge. Two prominent national infrastructure commissions studied more than 25 funding methods, and both recommended a mileage fee. Four states — Utah, Virginia, Oregon, and Hawaii — already have mileage fee programs, and 30 states have tested them.

Pushback against mileage fees generally centers on three concerns: privacy, rural fairness, and the costs of collection.

All current mileage-fee programs offer a higher-tech GPS-based option that records drivers’ positions in real time to charge them, raising the most privacy fears. To address this, states have taken steps to block access to the location data, delete it after specific time periods, and use private vendors to protect customer data from government overreach.

The programs also offer lower-tech options that do not include location data, such as a yearly manual odometer-reading option that logs miles and bills accordingly.

In terms of costs, research finds that most rural drivers would pay less under a mileage fee than under a gas tax increase. This is because rural residents tend to drive more trucks and other less fuel-efficient vehicles. Raising the fuel tax to today’s inflation-adjusted levels or imposing a vehicle-weight fee that covers the full cost of maintaining roads would increase costs for rural drivers.

Currently, mileage fees are more expensive to collect than fuel taxes. However, as these programs scale up and new technologies are implemented, most experts expect collection costs to decrease to about 5 percent, near the fuel tax’s collection rate.

For decades, the gas tax was a logical way to connect driving and road funding. However, it’s time to modernize the nation’s bridges, roads, and highways and ensure users adequately fund them.

A version of this column first appeared at the DC Journal.

The post Mileage-based user fees can replace outdated federal gas tax appeared first on Reason Foundation.