Alliance for Innovation and Infrastructure | Aii Asks: Would you prefer a gas tax increase or miles traveled tax? - Alliance for Innovation and Infrastructure
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Aii Asks: Would you prefer a gas tax increase or miles traveled tax?

04 Mar 2020

Aii Asks sometimes tests our audience’s knowledge about a subject, like “What tax does the federal government add to every gallon of gasoline you pump?” Other times, we want to hear what you think. Our latest poll asked what form of tax you would prefer to pay for roads and bridges:

 

The Highway Trust Fund will soon run out of money. The 18.4 cent-per-gallon federal gas tax has not been raised since 1993 despite inflation, fuel efficiency gains, and now electric vehicles using no gas at all. Congress needs to find the money to fix our roads and bridges.

The federal gas tax is 18.4 cents per gallon, but every state includes its own taxes in the price you see at the pump. A mileage tax could mean cheaper gas, but paying based on your odometer reading instead.

Aii Asks: Would you prefer a gas tax increase or eliminate the gas tax and switch to a miles-traveled fee?

From our very small sample size, we found that our audience is divided on the best way forward. Approximately 55 percent said they would prefer a gas tax increase, while about 45 percent favored a transition to an actual miles-traveled tax.

Our simplistic survey did not include any other questions to explain the preference. There are many reasons to favor the current system or the proposed one. It also does not address how much the gas tax increase would be or what a miles-based tax would cost. But asks in theory, is it preferable to pay for gas or miles?

Today, the gas tax allows drivers to choose to drive less and pay less. The same incentive would exist for an odometer-style tax. While it is difficult to know how policymakers would actually handle the matter, the idea of switching to a miles-traveled tax would mean that the fuel tax can be cut altogether. Because gas is taxed at every level from city to state and the federal government, if the tax were cut, the price at the pump could drop by 30 cents or more per gallon. But by the same token, having so many levels of government levying taxes, it’s unlikely that every gas tax would retire, and obviously it would not happen overnight.

One problem with raising the gas tax is that many are not paying in, such as electric vehicles. Unless the gas tax increase also included a surcharge for electric and hybrid vehicles to recoup some cost, it would simply be an unfair tax policy exempting a class of drivers. Surely if the gas tax were about environmentalism, then this would not be unfair. In that case, EVs would be the final stage all drivers should attain to be out from under the fossil-fuel tax. But the gas tax is instead a user-pay system and a cost recovery method for road maintenance and repair. This means that all drivers must pay into it, no matter what they drive.

The miles-traveled tax accomplishes this because it is blind to the vehicle efficiency or fuel employed. On the flip side, it requires strong compliance efforts and self-reporting of drivers or accountability measures like registration and inspection. Added to this is a privacy concern that the government would see every location a driver traveled. Low tech reporting options could combat this by allowing only an odometer reading rather than GPS tracking. This would not align actual road use in a way that could allow policymakers to allocate resources based on where the driving occurs, but that is not possible with a gas tax either.

When actual policy is proposed and drivers can see that a gas tax increase would be, say 10 cents per gallon, or that a miles-traveled tax would be, say two cents per mile, a preference poll may be more meaningful. Those numbers are arbitrary, but are not far outside of the conversation over needed revenue and proposals.