How should the government tax drivers for maintaining the roads?


The gasoline tax is based on a simple principle: money is used to maintain the roads used by drivers according to the fuel with which they drive. But as Americans use less gasoline due to climate change concerns and switch to electric cars more, the gasoline tax looks like an outdated revenue generator – Pennsylvania Governor Tom Wolf has said already committed to phasing it out. Instead, Transportation Secretary Pete Buttigieg proposed taxing people based on kilometers traveled rather than directly taxing gasoline.

Although the idea was not incorporated into the Biden administration infrastructure plan, He had bipartisan interest for years and it’s unlikely to go away anytime soon. For InsideSources, two researchers examine the proposal as they debate: How should the government update the gas tax?

By Dean Baker

Moving away from a tax on gasoline as we move to electric cars is common sense that can have great environmental benefits. If we had relied on a hay tax to fund road maintenance during the carriage days, we obviously would have had to make a switch to gasoline cars. It is the same now that we are switching from gas to electric vehicles.

Applying this logic, reports indicate that the Biden administration is considering replacing the federal gasoline tax with a per-mile charge. It would also seek to push states in the same direction. (About 60% of the gasoline tax is at the state level.)

The logic of this change is simple. If we continue to allow gasoline taxes to fund road repairs and improvements, we will see significant revenue losses as people switch to electric cars.

Since electric cars cause as much damage to roads as gasoline-powered cars, we will still have to spend as much on road maintenance in a world with electric cars as we do today. Also, as long as most of the electricity still comes from fossil fuels, we should wish the tax would discourage driving in general.

The arithmetic of a tax per mile is simple. If we have state and local taxes averaging 50 cents per gallon and cars average 20 miles per gallon, then we would want the tax to be 2.5 cents per mile to get the same. amount of revenue we did with the gasoline tax. Of course, we may want to raise taxes if the goal is to generate more income or have a stronger deterrent to drive, but the logic is clear.

We can also structure the tax to discourage people from driving less fuel efficient cars. For example, we can set the tax to be 4 cents per kilometer on a large SUV that consumes only 15 miles per gallon, while it is 2 cents per gallon for cars that travel more than 40 miles per gallon. gallon.

The administration of this tax should not be a major problem. Drivers may be required to have their odometers checked at regular intervals. For example, the annual car inspection required in many states may include an odometer reading that serves as the basis for paying the tax.

“Drivers may be required to have their odometers checked at regular intervals. “

Dean Baker

The advantage of going for a kilometer payment is that we could also consider structuring other payments along the same lines, including car registration fees. Currently, most states charge a flat fee that is independent of the number of people driving. But if we changed the registration fee to a per mile charge, it would more accurately reflect the damage a driver does to the road system and help discourage driving.

If a state charges a fee of $ 200 and the average number of kilometers driven was 10,000 per year, that would result in a charge of 2 cents per mile. For a car that travels 20 miles per gallon, that would have the same driving deterrent as a 40 cents per gallon gas tax.

We could also consider structuring auto insurance payments on a per kilometer basis. While some insurers charge drivers by the kilometer, the vast majority of policies are still sold on a fixed cost basis.

Replacing the gasoline tax with a per-kilometer charge makes perfect sense as we move away from gasoline-powered cars. The Biden administration would be smart to move forward.

Dean Baker is an economist and co-founder of the Center for Economic and Policy Research. He wrote this for

By Iain Murray

It is clear that the federal gasoline tax has passed its expiration date. Initially touted as a fair way for motorists to pay for the maintenance of the roads they travel, it has become less fair as the wealthy buy hybrid and electric vehicles.

A mileage-based user charge (MBUF) system, where people pay based on the number of kilometers driven, makes sense. However, some people think the fees should be different depending on the number of emissions your vehicle emits. It does not make sense and it repeats the mistakes of the current gasoline tax.

The gasoline tax was fair because it was based on a simple principle: user pays, user benefits. Before the gasoline tax, all taxpayers paid for road maintenance and new construction. But it was especially unfair for the poorest people who couldn’t afford a car. The creation of the Highway Trust Fund in 1956 and the introduction of the gasoline tax to pay for it shifted the burden to people who used roads and highways.

READ MORE: Phasing Out Gasoline Tax In Pennsylvania Creates New Challenge: What’s Next? | Editorial

However, in recent years the gasoline tax has shifted more towards a “some users pay / all users benefit” model. With the introduction of hybrid and all-electric vehicles, some road users are paying far less than their fair share for the wear and tear they impose on the roads because they pay less or nothing at all in gasoline taxes.

This injustice is compounded by the fact that owners of hybrid or electric vehicles (EVs) are likely to be well educated, young and relatively well off. A study of, for example, found that the average owner of an electric Ford Focus had a family income of $ 199,000 per year. People who pay the most for road maintenance are more likely to be less educated, older, and poorer than hybrid / EV owners.

Switching to MBUFs would reduce this disparity. Owners of hybrids and electric vehicles would return to the Highway Trust Fund based on their use of the roads. Some people argue that MBUFs are unfair to rural Americans who drive longer distances, but it’s no more unfair than the gas tax. Indeed, MBUFs may be fairer in this regard, as rural Americans tend to drive older, less fuel-efficient vehicles.

“In reality, it is not a tax but a user charge, like a toll (road tolls, without toll stations).

Iain Murray

This is why the proposal to switch to a “green” kilometer charge is less desirable than a flat rate. The idea is that because of the issues with vehicle emissions, there would be lower rates for cleaner vehicles. It repeats the injustice of the gas tax. Internal combustion engines create emissions. Vehicle emissions have nothing to do with the maintenance of road infrastructure. Hybrids and electric vehicles impose wear and tear on roads and highways as much as traditional cars.

Unfortunately, MBUFs are poorly understood. They are often mistakenly called – including recently by Transportation Secretary Pete Buttigieg – a kilometer “tax”. In reality, it is not a tax but a user charge, like a toll (road tolls, without toll stations).

There are also unsubstantiated claims that mileage trackers are some sort of national surveillance program, allowing the federal government to know where we are and where we are going at all times. But state pilot programs have already proven to be mindful of this sensitivity and have built-in safeguards to prevent such misuse of user data.

We need to finance our roads and highways. Congress should make adequate and equitable financing of our country’s highway infrastructure a priority, completely replacing the gasoline tax with mileage-based user fees.

Iain Murray is vice president of the Competitive Enterprise Institute. He wrote this for

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