Monday, October 18

Vehicle-mile fees or gasoline tax

Randal O’Toole, writing in Cato at Liberty, explains the benefit of vehicle-mile fees over the present gasoline tax. The heart of his argument is here:

Still, I welcome Blumenauer’s support for vehicle-mile fees, which have several major advantages over gas taxes. First, they will allow people to pay for the roads they actually use and not just for the gallons of gasoline they burn. Second, once the technology is implemented, cities and counties — which currently spend about $30 billion in general funds subsidizing roads — can collect vehicle-mile fees and end all subsidies to roads. Third, as I explain in a recent Cato Policy Analysis, varying vehicle-mile fees with traffic levels can end congestion by effectively doubling highway capacities during rush hour. Fourth, by forcing state, county, city, and other road owners to compete for people’s travel dollars, they would offer road users better services at lower cost.

Moreover, rather than a way to fund more pork barrel, vehicle-mile fees would offer a natural path towards devolving transportation funding to state and local areas. The only real justification for a federal gas tax is that the federal government has an inexpensive way to collect this form of user fees: it collects the tax straight from refineries and importers long before the fuel reaches your local gas station. With vehicle-mile fees, the revenues can go straight to the road owners — meaning states, counties, cities, and private owners — thus cutting out the need to have the federal government as a middle-man.

Full article at Will Vehicle-Mile Fees Be a User Fee or a Tax?