When cars are no longer powered by gas, who will pay for roads and transit?
Yesterday, an AP reporter asked White House press secretary Robert Gibbs if the Obama Administration was considering imposing a mileage tax to pay for transportation, claiming that Transportation Secretary Ray LaHood had come out in favor of the revenue generator in an interview. Mr. Gibbs immediately shot down the reporter, saying that the administration would not be advocating such a plan. But with high-mileage cars increasingly common, will the government find the funds to build roads and operate transit systems?
Currently, the vast majority of revenue for highway construction and transit subsidies comes from the gas tax, which is 18.4¢ per gallon. Many states add to that amount, increasing the tax to a maximum of 62.8¢ per gallon in California, though the nationwide average is 47¢ per gallon. (Diesel fees are slightly higher.) This system is based on two concepts: one, that people who drive should pay for the roads that they use; and two, that people who drive more efficient cars should be rewarded for their vehicle choice.
Gas tax revenues go directly to the Federal Highway Trust Fund, which was created in 1956 to fund the Interstate Highway System and which has three accounts: roads, transit (2.85¢/gallon), and underground gas storage (0.1¢/gallon). Last year, the fund ran out of money, forcing the U.S. Congress to allocate $8 billion to ensure adequate funding for projects already under construction; the fund is likely to run out of money once again this year, even though allocations from the fund are supposed to be based on the pay-as-you-go principle. Though the majority of money from the account goes to roads projects, the 1982 Surface Transportation Assistance Act added the small but important mass transit account.
The problem with the gas tax system is threefold: for one, it hasn’t changed since August 1993, meaning that its relative value has declined over time as inflation has taken its toll; second, people started driving less beginning last year; and third, as people drive more and more fuel efficient cars – and eventually electric ones – the fund will lose a large percentage of its revenue since people will not be buying as much gas as before. Mr. Gibbs’ quick response, then, doesn’t answer the United States’ long-term transportation-funding dilemma.
The mileage tax, which would require people to pay based on the numbers of miles driven, rather than based on the number of gallons consumed, should be given rightful consideration, as Secretary LaHood had indicated. It would be more feasible to implement than tolling devices all over the country and it would be fairer than using general funds from federal income tax revenues to pay for transportation, which not everyone uses equally.
At the moment, it may seem completely politically infeasible because it would intrude into the privacy of America’s drivers – it would require drivers to install a GPS devise to monitor their every movements. But, theoretically, a system could be created that blocks information about the driver’s location and simply records their total movement.
Without a new revenue source, our transportation dollars are likely to decline steadily over the next few years, and Mr. Gibbs’ glib rejection of the mileage tax seems less thought out than we should expect from an administration that claims to be concerned about the steadily increasing deficit. After all, if we don’t pay for transportation through a defined revenue source, and we don’t raise general taxes, we’re going to be paying for our roads by taking on debt.