Fair mileage fees may earn points, but not 'green' ones
It’s plain that the federal gas tax is past its sell-by date. Originally introduced as a fair way for automobile drivers to pay for the upkeep of the roads they use, it has become less fair as rich people buy hybrid and electric vehicles. Instead of bailouts, the gas tax needs replacing.
A system of mileage-based user fees (MBUFs), where people pay depending on how many miles they drive, makes sense.
However, some people think the fee needs to be different depending on how many emissions your vehicle puts out.
That doesn’t make sense, and it repeats the mistakes of the current gas tax.
The gas tax was fair because it was based on a simple principle: user pays, user benefits. Before the gas tax, all taxpayers paid for the upkeep of roads and building new ones. But this was particularly unfair to the poorest people who could not afford a car. The creation of the Highway Trust Fund in 1956 and the introduction of the gas tax to pay for it switched the burden to the people who used roads and highways. The more you used the roads, the more gas you used, the more you paid for their maintenance and the creation of new roads.
Yet in recent years the gas tax has moved more toward a “some users pay/all users benefit” model. With the introduction of hybrid-electric and all-electric vehicles, some road users have been paying far less than their fair share for the wear and tear they impose on the roads as they pay less or nothing at all in gas taxes.
This unfairness is compounded by the fact that hybrid or electric vehicle (EV) owners are likely to be well-educated, young and comparatively well-off. A study by TrueCar.com, for example, found that the average owner of a Ford Focus Electric had a household income of $199,000 a year. The people who are paying the most for road upkeep are more likely to be less well-educated, older and poorer than the hybrid/EV owners. The gas tax has become, in the language of taxation, regressive.
Switching to MBUFs would help alleviate this disparity.
Hybrid and EV owners would once again pay into the Highway Trust Fund according to how much they use the roads.
Some people argue that MBUFs are unfair on rural Americans who drive longer distances, but it’s no more unfair with MBUFs than with the gas tax. Indeed, MBUFs may be fairer in that respect, because rural Americans tend to drive older, less fuel-efficient vehicles, meaning that proportionately they are paying more than people who drive more fuel-efficient vehicles.
This is why the proposal to move to a “green” mileage fee is less desirable than a flat rate. The idea is that because of the problems associated with vehicle emissions, there would be lower rates for less emitting vehicles and higher rates for more emitting vehicles.
This repeats the unfairness of the current gas tax. Internal combustion engines create emissions. Hybrids emit less, and EVs virtually none to speak of (this does not include emissions created in the generation of electricity, which may be substantial).
That has nothing to do with road infrastructure upkeep. Hybrids and EVs impose wear-and-tear on roads and highways as much as do traditional cars.
There are unfounded allegations that mileage trackers would form a kind of national surveillance program. State pilot programs have already proven alert to this sensitivity and have built-in safeguards to prevent such misuse of user data.
We don’t need more government intrusions or social engineering. We need to fund our roads and highways. Congress should make the adequate and fair funding of our nation’s highway infrastructure a priority, fully replacing the gas tax with a mileage-based user fee.
Iain Murray is a vice president for the Competitive Enterprise Institute. He wrote this for InsideSources.com.