To examine new ways to compensate for federal highway budget shortfalls, along with other consequences of roadway traffic, alternative ways of taxing vehicles have recently been analyzed by the Congressional Budget Office.
If the study prompted legislation taxing motorists for miles they drive, instead of fuel they consume, drivers of electric cars would have to pay in ways for which they are not now required.
The CBO’s study was reportedly a quick turnaround released last week. It was done following an early March request by the Senate Budget Committee Chairman, Kent Conrad (D-N.D.).
In that same hearing, Transportation Secretary Ray LaHood had said the Obama administration hopes to spend $556 billion over the next six years – with the bulk of it going toward federal transportation improvement projects.
In response, Conrad broached upon the possibility of levying road use taxes based upon Vehicle Miles Traveled (VMT) instead of fuel taxes as a way to collect more revenues as people move to more fuel-efficient vehicles.
“Do we do gas tax?” Conrad asked. “Do we move to some kind of an assessment that is based on how many miles vehicles go, so that we capture revenue from those who are going to be using the roads who aren’t going to be paying any gas tax, or very little, with hybrids and electric cars?”
Currently, roadway building and improvements are partially paid by fuel taxes, and where applicable, tolls. Since rules were set in 1993, the Highway Trust Fund is financed by federal gasoline taxes of 18.4 cents per gallon, and diesel taxes of 24.4 cents per gallon.
“About 25 percent of the nation’s highways, which carry about 85 percent of all road traffic, are paid for in part by the federal government,” CBO said. State and local funding also go into the funding mix.
In its introduction, the study says nothing about electric cars and hybrids, however. It merely states that its primary concern is to make up for the highway fund’s budget deficit, and pay future expenditures. Since 2008, $30 billion has been withdrawn from the general fund to help fund highway maintenance and improvements.
To close the gap, and provide the nearly 19-times more ($566 billion) that policymakers would like to spend in the next six years, the CBO explored proposals, giving actionable information that could be used to support a variety of taxation scenarios based on VMT.
If VMT-based taxation were to be implemented, it would have to be monitored in some way. This could be by vehicle-installed devices, or by cameras tracking registration plates, like they use in London, or something as simple as odometer readings, or even a scanner at way points.
Some regions in the U.S. and around the world have already experimented with different approaches, and the technology is there to do it, the study says. The question – which the study examines pretty thoroughly – is how best to implement a system restructuring to make roadway users pay.
“Having the devices installed as original equipment under a mandate to vehicle manufacturers would be relatively inexpensive but could lead to a long transition,” CBO said, “requiring vehicles to be retrofitted with the devices could be faster but much more costly, and the equipment could be more susceptible to tampering than factory-installed equipment might be.”
The study does not use the term “discrimination,” but it does give measures of relative “equity.”
As shown in the charts above and below, the study’s concerns for “equity” focus on unequal share of the tax burden under the present system. Those people in the middle two-fifths (quintiles) of socio-economic tiers pay a disproportionate share, the study says. These include rural and urban dwellers.
Other concerns are for the myriad consequences of traffic density.
“Any given driver’s highway use also imposes costs on other users, on nearby nonusers, on the environment, and on the economy in the form of congestion, risk of accidents, noise, emissions of greenhouse gases and pollutants that affect local air quality, and dependence on foreign oil,” CBO said.
As can be ascertained from the above quote, many additional consequences of traffic density were looked at. Concerns exist also for how to reduce traffic by levying charges to encourage desired behaviors. Another study on that topic can be found here.
It was also observed that passenger vehicle traffic accounts for 90-percent of the vehicles, thus the bulk of the congestion. Tractor trailers, while accounting for about 10 percent of vehicles, accounts for more roadway damage. It is presumed that VMT-based taxation would need to tackle the question of equity for drivers of lightweight cars and small trucks, compared to those in heavy trucks.
Concerns about privacy were also foreseen, as VMT monitoring technology could be similar to OnStar, with the federal government having data.
CBO did say that some have proposed restricting information that would be transmitted to the government. This too would need to be hashed out.
Of course any legislation would change taxation not just for plug-ins, but all cars. And clearly, potential legislation has many possible avenues it could take. Fuel taxes could be eliminated, with VMT taking over. Fuel taxes could be reduced, with VMT taking up the slack, and then some. Fuel taxes could be raised, and no move to impose VMT could be chosen.
At this juncture, no definite legislative steps are known to have been taken to enact a new mix in highway funding. It is believed that some state and federal legislators are looking at proposals to include VMT-based taxation, now that the CBO information is in.
The 38-page full study pdf goes into far greater detail than this article could cover. To read a summary, click here. To download the entire study, click here. If you download the full study, read it, scan it, or put the term “electric” in the pdf’s search bar to see references to “electric” cars on pages 10, 19, and 20.
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