How NOT to pay for highways

By Solomon Kleinsmith | Related entries in Energy, Gas, Legislation, Money

In one of those “every silver lining has a cloud” kind of situations, state and federal government road maintenance funds are dwindling as people drive less and use less gasoline per mile as they buy more fuel efficient cars. The federal government had to put $8 billion into the Highway Trust Fund because plummeting gas tax revenue, and a Congressional commission put forth one possible solution that is kicking up a lot of opposition.

Instead of paying a tax per gallon at the pump, how about you install an expensive device on your car that tracked how far you drive, and then you get a bill depending on how long you were on the road?

I really tried to come up with some merits for this plan, but frankly this tax per mile plan is just a terrible idea. If there were no other alternatives, then this may work, since we do need money to pay for roads and highways and it makes most sense to tax the actions that cause those roads and highways to wear out. But don’t we already have ways of paying for roads?

We currently pay for our roads mostly through the gasoline tax. Both the federal government and the states charge a certain amount per gallon of gasoline you pump into your car. Essentially what you’re seeing here is a problem where politicians have been reluctant to raise the gas tax to meet the needs of the programs it funds, and are looking for a different way to do so that might not seem as bad to constituents.

Problem is, its much worse than the gas tax.

There is no infrastructure needed to implement the gas tax. It’s added on to every gallon you pump at the gas station. With this plan every car would need to be outfitted with a device (that currently run in the thousands, but could be brought down into the hundreds apparently) that would track your mileage, then you would have to go to some place that you could upload this information every so often (presumably also at gas stations) and you’d get a bill for your mileage tax. So instead of raising an existing tax to fill the budgetary gap, they’d like to raise a new tax and spend billions on the devices needed on our cars, as well as the collection devices needed to get that information to the state.

As if I needed any more reasons, there is the issue of how the gas tax already encourages behavior that not only is good for the country, but also good for the environment… and even good for the roads. Which cars do you think are going to wear the roads down more? Big gas guzzling Hummers, trucks, sports cars and semis, or Smart cars, Priuses and Insights? Gas guzzlers also cause more money to flow to oil producing countries overseas, and send more pollution into the air.

Raising the gas tax to pay for roads makes much more logical sense than making people pay the same per mile if we want to wean ourselves off of foreign oil, get cleaner air and put less stress on the roads. It encourages people to buy lighter, cleaner and more efficient cars, and raising it more would decrease the time it takes to make up the difference in purchasing cost between regular cars and their more efficient brethren. This proposal would literally be a disincentive, counteracting with other government programs designed precisely to encourage purchase of more efficient vehicles.

On the bright side, Obama has come out flatly against the plan, even though his Transportation Secretary Ray LaHood has made comments in favor of the idea. Barbara Boxer supports it, which you might expect from one of the most liberal Senators we’ve got, but the only poll I could find on the subject shows that 70% of respondents (North Carolinians) are against the idea. An older poll that I dug up, showed that while most people are against a hike, 55% would support it if it “reduced the U.S. dependence on foreign oil”. An even larger majority, said they’d support it if it “resulted in less consumption or eased the threat of global warming”.

So I come back to my original problem with this proposal. If the public is against the idea, is it a disincentive for behaviors that the government is already trying to promote with other programs, adds unnecessary infrastructure and of course adds a whole new tax to complicated the already labyrinthine code we have here… then what is a single good reason to support this over a higher gas tax?

The federal gas tax has sat at the same 18.4 cents per gallon for 16 years. That it hasn’t gone up in so long is a clear indication of who is to blame for the Highway Trust Fund running out of money. Its time for politicians to suck it up and tell people they need to either cough up a few more cents per gallon, or learn to live with a whole lot more potholes.


This entry was posted on Friday, July 24th, 2009 and is filed under Energy, Gas, Legislation, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

7 Responses to “How NOT to pay for highways”

  1. Chris Says:

    yeah it’s a terrible idea, that and the fact that since it’s a individual unit, people would be manipulating the hardware to not have to pay the tax.

  2. Jon Says:

    The gas tax seems like a perfect solution–easy to change, hits the biggest abusers hardest and requires no special equipment. If we raised the Federal gas tax to $1 per gallon–still low by European standards–that would raise tons of money which could be used for mass transit or even large rebates for buying new high mileage (> 40mpg) cars.

  3. Aaron Says:

    You know the biggest problem I have with this? All cars already come with an inexpensive piece of equipment to track how many miles you drive. Its called an odometer.

    Not to mention the privacy implications of having GPS tracking of every car.

  4. Solomon Kleinsmith Says:

    I left the privacy issue out because I sort of assume that someone would be able to figure out a way to make it work without a GPS… some sort of device with military level encryption that piggypacked on your odometer or something. Regardless… lets be generous and say they brought the cost per person to implement this down to around 50 bucks… according to the 2007 Statistical Abstract of the United States, adding a few more years and rounding… we have around 260 million cars, meaning to even get this off the ground, citizens would have to spend around THIRTEEN BILLION to put these on their cars. Who knows how expensive it would cost to put these devices in enough places to get the information off of them, not to mention fraud checking, enforcement of the rule… yadda yadda yadda.

    I disagree about raising the gas tax to an artificial amount like $1 though. I think it should merely stay with demand for highway and road construction and maintenance needs. If we want to increase investment in mass transit (I’m a HUGE fan of light rail/streetcars… although very skeptical of high speed rail) then funds can be raised through the normal processes that bills travel through the legislatures. Generally I agree with the Breakthrough Institute’s idea that the best way to get us out of our addiction to oil, and pollution problems, is not to tax oil and pollution so much as it is to invest more in research and development of replacement technologies so they reach the point of competitiveness with gasoline and coal faster. You can do both, but its the second that will bring the real change.

    If anything is going to be taxed more, it should be the worst polluting coal plants… and they should be charged on the so called ‘hidden costs’ they cause in the surrounding area. Namely increases in certain health problems and even a statistically significant decrease in crop production. I’m working on an in depth multi part series right now involving that… so check back in about two weeks for more on that!

  5. Nick Benjamin Says:

    I’d support a gas tax hike too. It would pay for better roads, and we need better roads.

    I doubt $1 a gallon is doable. In much of the country people HAVE to drive, and they have to drive long distances. We’re talking 20 miles, sometimes 30-40, miles one way. Even at 40 MPG a $1 gas tax just made the low end of that trip cost an extra dollar. Let’s say you only make one round trip a day. That’s still $300-$400 a year. Which is a week’s wages for an awful lot of people.

    This situation gets worse as population density gets lower, and there are a lot of low population-density states. You think Grassley is gonna win re-election if he doesn’t filibuster a $1 gas tax? How about Tim Johnson (D-SD)? We could probably get them to up the gas tax somewhat, but we’re never gonna get anywhere near $1 a gallon.

    Solomon, what high-speed rail precisely are you skeptical of? When most Americans say High Speed rail they’re not talking about anything that’s terribly radical. According to Wikipedia “Emerging High-Speed Rail” is only 90 MPH. We managed that in the 30s. GM’s locomotive division manufactured engines with a top speed of 98 MPH as late as the 50s.

  6. Solomon Kleinsmith Says:

    When I refer to high speed rail, I’m not talking about rail that uses current infrastructure to deliver people more efficiently, I’m talking about newer technologies who’s initial buildout cost outweighs its relative value of transporting people a little faster between East Coast points A and B. Maybe the equation for bullet trains works out for Japan and parts of Europe, but from the studies I’ve seen it doesn’t work out here yet.

  7. Heather Inacio Says:

    @ Nick Benjamin….I’m still confused as to why you are currently employed?!? Help me out with this one please. The CA Bullet Train ” the real bullet train”….was just another pot for you to dip you hands into. Right!

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