Iâ€™m a supporter of higher taxes, so if I were a Senator and someone was bringing a vehicle miles traveled tax to the floor I suppose Iâ€™d be prepared to support it. But the sporadic bouts of enthusiasm for this idea are really baffling. As public policy, a VMT has no advantages whatsoever over higher gasoline taxes. Raising a given quantity of funds through a new VMT rather than through higher gas taxes creates (a) more administrative headaches, (b) more civil liberties concerns, (c) fewer environmental benefits and in exchange you get nothing. They say higher gas taxes is a hard sell politically (though given that elites from both parties privately acknowledge that itâ€™s a good idea you could always just not sell it) but a VMT would be just as hard a sell.
As Andrew Samwick says â€œThe appropriate tax instrument to make up for declining or inadequate gas tax revenues isâ€¦a higher gas tax rate.â€ If at some future date vehicles have become so incredibly fuel efficient that no gas tax rates could possible raise the revenue we need, then that would be an excellent problem to have. And itâ€™s certainly not a problem we have right now.
I think he makes a number of good points, but I don’t think the case against a VMT is that foolish. The problem with a gas tax is that its purpose is unclear. It’s not really a user fee, but it’s meant to fund transportation. It’s kind of a tax on negative pollution externalities, but its heart isn’t really in it since its value has been falling over time. I also think it’s kind of a problem that revenue to fund transportation varies inversely with oil prices, and I think the civil liberties problem is significantly overblown, since pretty soon most Americans will be walking around with GPS in their pockets anyway.
The biggest advantage to a VMT is that because its implementation has to be “smarter”, it offers you the flexibility to do some very useful things. In particular, GPS-based VMT taxes can be used to implement variable congestion tolls. When you get in your car in the morning, your NAV system could plot several routes, the rates for which have been set based on congestion levels, and it could tell you which way is cheapest. The ability to price roads individually, on a varying basis, and without erecting toll booths or traffic cameras all over the place is a huge advantage.
Obviously, that kind of thing would be very difficult to pass at the federal level. On the other hand, we haven’t raised the gas tax in nearly 20 years, so it’s not clear to me that attempting to try something new is a totally silly idea.