What are gas taxes for?

Gaspump2The U.S. federal government is experimenting with ways of replacing some or all of its gasoline tax with a system that would charge drivers according to how many miles they drive, according to North Carolina’s News & Observer. About 450 drivers in its coverage area, which includes some extremely high-tech–savvy folks, will be participating in a technical test of a GPS system that’ll track their driving.

The problem, evidently, is that drivers are switching to high-efficiency cars, and road-construction costs are going up.

Lew Rentel of Morrisville drives one reason our road money is running low — a Toyota Prius.

Rentel, 69, used to drive a hulking Lincoln Aviator that burned up a gallon of gas every 13 miles. With 48.6 cents in state and federal taxes per gallon, he was paying the government 3.7 cents for every mile he drove.

But he ditched the luxury SUV for what he called patriotic reasons: to help fight global warming and cut our need for foreign oil. Now with a thrifty hybrid that gets 44 miles per gallon, Rentel has cut his tax payments to barely a penny per mile.

He realizes that people like him are doing less to help pay for the roads.

“Something’s going to have to be done,” said Rentel, a retired UPS executive. “You’re either going to tax by the mile, or you’re going to tax some other way.”

According to the News & Observer, the gap is so great that the federal Highway Trust Fund, which depends on gas taxes, is expected to go from an $8.9-billion surplus this year to a deficit by 2009. According to the Congressional Budget Office, it’s actually worse than that — a report from last March (PDF) seems to say pretty plainly that the fund has been in deficit since 2000 and is down to $9 billion, which in highway-construction terms is like being down to whatever cash is in your wallet right now.

So they’re trying to figure out what to do, and finding ways to make people pay by the mile is at the top of the list.

The Iowa researchers will outfit volunteers’ cars with computers and satellite gear to record where and how far they drive. Each month, the volunteers will receive sample bills for how many miles they have driven. Their mileage fees will be compared to the per-gallon taxes they pay now. Congress is considering a call to boost new-car fuel efficiency standards by about 40 percent, to an average of 35 mpg, by 2020. By then, some Americans will be driving cars that use no gas or diesel fuel — and pay no fuel taxes.

Taking gasoline consumption as a proxy for road usage was always questionable, though it was certainly convenient for quite a while there. The taxes have always sent a mixed message, though, particularly since gas taxes are always thrown into the “sin tax” category with liquor and cigarette taxes. Are they taxes on sin or user fees for the roads? What if the money goes to mass transit (as some of the trust fund actually does)? What, precisely, is the rationale behind the tax? If you’re a legislator levying a tax and you can’t give a specific answer to that last question, you’re eventually going to have problems.

This is a variation on the problem with giving hybrid cars access to high-occupancy vehicle lanes even if there’s only a driver in them — are HOV lanes a congestion-fighting measure or a way to reward the environmental benefits of carpooling? Don’t know? Better figure it out, or else your policy on who gets to use them isn’t going to make any sense.

It’s never made sense to charge people buying gasoline for their lawnmowers a fee to go for highway maintenance, just as it doesn’t make sense that cyclists get to use the roads for free (or at least only for the portion of their income and other taxes that go for road maintenance). These have been minor evils in a system whose efficiency has overriden those considerations, though. It hasn’t mattered till now, when a whole lot of people are looking for ways to use the roads in ways that happen to involve not paying for them, based on the system we’ve set up.

I think the lesson applies to another great big policy question: carbon taxes. I’m still vacillating on the usefulness of carbon taxes versus the other measures that are available for controlling greenhouse-gas emissions, but this gas-tax problem seems like a worrisome parallel: If using gas consumption as a proxy for road usage gets us into trouble eventually, what problems might we be setting ourselves up for if we use the purchase of carbon-based fuels as a proxy for greenhouse-gas emissions?

One is that if I’ve already paid a zillion bucks in tax for the coal that powers this generating plant I own, I don’t have a lot of incentives to sequester the carbon dioxide the thing emits. Heck, I’ve already paid for all that stuff, so why would I pay extra to keep it contained?

Unless there’s some separate incentive system — rebates on the tax if I sequester the carbon — in which case it seems to me that a carbon tax’s key selling point, its simplicity, is right out the window.

(Via Planetizen. Photo credit: “Gas pump,” Flickr/romulusnr.)

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One response to “What are gas taxes for?

  1. That’s nice and all but you have to acknowledge that the wear on an asphalt surface is a function of vehicle weight. If you want to charge people by the kilometer driven, then you should multiply that by the (loaded) vehicle weight to arrive at a proper metric. Then heavy trucks will have to pay an appropriate cost to reflect the disproportionate amount of damage they do to road surfaces.

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