Funding for a study was inserted into the annual transportation budget proposal by State Rep. Rick Geist that is worth supporting – a study that’s aim is to assess a “fuel” tax based on miles driven as opposed to a fixed amount per gallon of gas. If you will pardon the pun, this study is drilling down to the heart of the problem for the future of transportation funding, and it presents a real opportunity for Pennsylvania.
First, let’s acknowledge the problem. In the years since the first CAFE standards were introduced the amount of revenue per mile driven has dropped. As fuel efficiency standards increase so do the miles per gallon, leaving our transportation infrastructure used more – and getting less funding to support it.
Unlike most taxes, liquid fuels taxes are assessed as a cost per unit, not as a percentage of price. The impact of the use of that gallon is always increasing with efficiency, but the tax per gallon is static to the consumer.
20 years ago a gallon of gas was about $1, and the taxes were about 40% of the cost. Now gas is $3.50 a gallon, and the tax is about 15% of the cost – and the vehicles today are traveling farther on that 15%.
The double whammy (and the irony) is what happens when gas prices rise – not only does the share per gallon go down, but people also use more fuel-efficient cars or travel less. The result is a declining pool of money to fix and expand roads — roads that are poorly maintained and exceeding flow capacity as it is.
The political likelihood of shifting to a percentage of cost per gallon tax structure is the same as my endorsing Biden in a GOP primary – I guess it COULD happen, but the probability approaches zero. The reason is obvious: such a move would mean a faster rate of gas price increases.
Such a move is politically untenable; gas prices are the one commodity that the vast majority of us deal with on a regular basis, and it’s the price that impacts our economic thinking the most. High-gas prices color all we see – as any politician bombing Libya can confirm.
Any proposal, then, has to be – at minimum – neutral in implementation at the pump. Even better – if it shifted to a monthly bill you paid online on a per mile driven basis, you could show an immediate drop per gallon of 51 cents here in PA. Politically speaking, such a “cut” would be gold – even if the resulting tax burden per mile traveled went up. That cost could be assessed monthly or quarterly, a manner that would likely make it seem less jarring.
And such a move would have the same ability to help conservation – car pooling becomes a real thing when it can save you $50 a month you actually see saved at the end of each month (maybe, although I am willing to bet nothing takes our cars from us short of Obamacare confiscating them).
A miles-driven standard can work. It addresses the real funding problem we face – and as I said earlier it opens the door for a real opportunity.
One of the major stumbling blocks to shifting from a gas based transportation system to a CNG system is the question of how to raise the revenue we need for infrastructure. A miles-driven standard would treat all fuel sources equally within vehicle class – something that makes use of CNG more palatable politically.
The fact is we are moving to a more varied mix of transportation fuels anyway – from hybrids to full electrics to CNG and bi-fuels. The type of fuel used has no bearing on the cumulative damage done to roads. Put another way, transportation infrastructure is not worn out by the use of oil-based fuel; it is worn out by vehicles traveling over those roads. The amount of miles driven on them is the key – not what powered the vehicles.
Set up over a period of years, a switch to a system like the one being studied in Rep. Geist’s proposal is exactly the type of change that we need to match user with the cost on a proportionate basis.
And fear not all you denizens of incentive based policy: you can have your cake and eat it too. The ability to identify classes of vehicles within that miles driven standard – based, most fairly, by weight and axles – would leave it open to all of the same shenanigans we see now.
Regardless, the time to study and implement such a system is now. The current political class can get on board because they will look to be cutting taxes. Future generations and politicians will have a stable and appropriate revenue basis for infrastructure maintenance and improvement.
And most importantly, such a system will make it oh so much easier to get the powers that be on board with a broader application of CNG for transportation. And, sitting as we do within the boundaries of the Saudi Arabia of natural gas, such a shift would be welcome indeed.
You can read more at about the proposal by clicking on Rock The Capital.
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