The Growing Road Tax Problem

The interstate highway system was established in the 1950’s to improve transportation between the states (Wikipedia has a good history.) Its initiation was typical of a government project – it cost about 5 times as much and took about 3 times as long as initially estimated – but overall it’s been a pretty good success story for the pro-government crowd. It’s essentially a public good with positive externalities that helps facilitate transportation and communication between states. The opportunities and conveniences it provides are probably a much greater contribution to the overall economy than what the states would have had without it (although you can probably find a libertarian to argue otherwise).

Of course, ongoing maintenance of the highway system costs money, and in 1956 a tax was established on gas. Its current value of 18.4 cents per gallon has been basically unchanged since 1993. There are a few other sources of revenue and a few other uses of the revenue (see linked article), but for the most part the highway system is maintained by the tax.

In all the Tea Party rhetoric these days against taxes, it’s easy to forget one of the main reasons governments collect taxes at all – to pay for things that everybody uses. And for years, the federal gas tax has been one of the best examples out there of a proper tax. Unlike, say, income tax or sales tax, there’s a pretty direct correlation to what you’re paying for and where that money goes to improve your life. It’s not perfect – everybody doesn’t drive on the interstate in equal proportions – but it’s pretty good. People who use the most gas are the ones most likely to be driving down the long interstates, causing wear and tear on those roads but also paying into the gas tax. To put it simply: road use and gas use have been pretty strongly related.

But things are changing.

Cars get better mileage than they used to. Consumers are demanding it because they don’t like paying for high gas prices, and the government is even mandating it out of carmakers with the regulatory beauty known as the Corporate Average Fuel Economy. Unfortunately – as so often happens when government tries to do so many things – the pro-mileage policy is undermining the collect-taxes-by-the-gallon-to-pay-for-road-use policy. If the average fuel economy of the nation’s vehicles increase by 5%, then the same number of miles may be driven but consumers will buy 5% fewer gallons of gas. The highway fund collects 5% less revenue, but the same number of miles are driven and the costs of road maintenance remain the same. As a result, the fund suffers:

The fund needed an $8 billion emergency transfer from the government’s general fund last year, and is projected to run out of money this year.

….Two panels commissioned by Congress as part of the last highway bill in 2005 are recommending increases in the tax.

Many transportation advocates, however, think a cents-per-gallon gas tax is becoming obsolete, particularly with the advent of hybrid and electric cars and alternative fuels.

As gas prices remain high, increasing the tax is politically unpopular. Besides, the correlation between road use and gas use is becoming weaker and weaker, and increasing the tax on what’s left of it is not a long-term solution. That article was in 2009. A more recent CNN article claims that “between 2008 and 2010 the federal government had to supplement the Highway Trust Fund by an additional $30 billion.”

A recent article by the Infrastructurist presents a good picture of the current problem – and the comments contain some informative dialogue about the complications of various solutions. (For example, it seems that heavier vehicles create exponentially more wear and tear on roads than lighter vehicles. These kinds of facts must be considered by any solution.) Of course, you also find comments like this: “The government wastes money left and right and all you can do is call for them to get more of our money…” This is Tea Party rhetoric that ignores the fact that the government is now collecting less money for this specific fund, and that we need to find a way to restore that revenue – preferrably one that directly correlates with road use so we can stop wasting money by transferring general revenue into the fund.

But technology sure complicates things.

Back to the CNN article. The simplest solution would appear to be replacing the “gas tax” with a “driving tax.” Number of miles driven would correlate a lot better with road use with gas use – except that it’s a whole lot less convenient to enforce. You can’t collect it when you buy gas, so you’re going to have to make people report their mileage at various intervals, or monitor it with smart cars or something, and that creates Big Brother fears. The beauty of the current tax is that if you buy gas with cash, you can use the road and pay for its use without the government ever needing to know how much you’re driving or where you’re going. A Hot Air article greatly argues about the dangers of a mileage tax – but it also doesn’t admit the problem of the current tax, stating “The problem with the federal budget isn’t a lack of resources.  It’s a lack of will to use those resources wisely.” I don’t care how wisely you use the resources of the gas tax – if everyone starts driving electric cars, you’re going to a have a lack of resources.

So then are we at an impasse? The gas tax doesn’t work anymore, but a driving/mileage tax presents an unacceptable affront to civil liberties. The idealist in me wants to believe that there is a creative solution out there, but it seems like the least bad and most likely option at this point is that the highways will continue to be supported by the general fund – which, of course, is a disconnect that will only increase inefficiencies in the use of the revenue.

I have a growing theory that technology is destroying the normal rules of life. I first noticed it with file-sharing and intellectual property laws. It’s not fair to musicians that someone can now copy their music from someone else for free, but there’s no way to prevent that without severely destroying personal liberties. Technology has created something that it is simply impossible to have reasonable laws about. And now I notice it with the gas tax. I may soon be noticing it with driverless cars.

I don’t like this theory. I want to disprove it. I like technology. It makes our lives easier. It should be making it easier to live lives free of trouble and interference. But it seems to be making things more complicated.