Infrastructure policy should include transition to mileage-based fees
Washington policymakers continue their internal debate on how to best improve our nation’s infrastructure, be it through bipartisan legislation or budget reconciliation. With significant interest to generate revenue and a clear need to improve our road and highway systems, Congress must make real progress in transitioning away from the regressive gas tax and towards implementing a more equitable national vehicle-miles-traveled (VMT) fee. Doing so would create a sustainable funding source for the Highway Trust Fund over time, slow or end subsidies to heavy highway users, and position the U.S. to best confront increased fuel efficiency and electric vehicle adoption.
The result would be a healthier and more stable transportation system needed for commerce and mobility — clear benefits for U.S. businesses and consumers. Lawmakers who need convincing that charging drivers a rate based on the number of miles they travel rather than on the amount of fuel they use should consider a host of factors.
First, the costs of maintaining the world’s largest highway network are high and growing. Analysis by the Progressive Policy Institute found that it is 68 percent more expensive for the federal government to invest in new infrastructure projects in just the last 20 years.
At the same time, the average car built in 2017 could travel 5.5 miles farther on a gallon of gas than one built just a decade earlier. While the number of miles Americans drive has doubled in the past 40 years, fuel consumption has increased by only half.
New analysis from the American Society of Civil Engineers shows the U.S. has a $786 billion backlog of highway and bridge capital needs. Indeed, since 2008, Congress has moved roughly $143 billion in general taxpayer dollars to the Highway Trust Fund.
All of which explains the increased interest in establishing a VMT system. Any increase in a gas tax is politically untenable and would be regressive in nature. An analysis by the Tax Foundation found that the gas tax burden on families earning less than $10,000 per year, as a share of income, is more than 10 times greater than the burden on families earning more than $150,000 per year.
Just this month, leading members of the National Surface Transportation Infrastructure Financing Commission urged Congress to make substantive progress on a national VMT program, including a national pilot program, as well as initial implementation for heavy duty commercial vehicles. On the latter, the group writes: “The benefits from a VMT system for trucks is higher than for cars, in part because the variation of costs imposed by trucks on the surface transportation system is much higher than it is for passenger vehicles.”
This makes good sense and can ultimately be scaled to everyday motorists, providing various benefits in the process. As the American Consumer Institute wrote in 2019: “Rates could be adjusted based on the type of road traveled, vehicle weight, time of day and other factors to better reflect the real costs drivers impose on our transportation system. VMT charges in urban areas, for example, could be increased to reflect the higher societal costs of congestion, as London and other cities have done successfully.”
By aligning drivers’ payments to the actual costs of their behavior, a VMT charge would encourage greater efficiency and achieve far more equity than the current system. Rural residents who generally drive longer distances and own less fuel-efficient vehicles could be charged lower rates.
In theory, a full transition over time to a VMT could yield a significant savings for many, as Americans would no longer be contributing taxpayer dollars to fund roads that they hardly use or do not at all, while heavy users — including commercial vehicles and individuals who drive the most — would pay their fair share. Such a system, if implemented correctly, would be more equitable and fiscally responsible than the current system. The Brookings Institution also estimates that replacing the federal gas tax with a VMT charge could generate 20 percent more social welfare than an equivalent increase in the gas tax.
Ultimately, if Congress is serious about creating infrastructure pay-fors, the well-studied VMT is the best long-term option. Consumers and businesses should demand action as they take up a bill.
Steve Pociask is president and CEO of the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visit TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.