E-news exclusive: Is the federal gas tax obsolete?

Tina Grady Barbaccia

December 13, 2011

Christopher Hopkins
Christopher Hopkins

The 1970s marked the first time Americans rushed in a panic to buy fuel-efficient foreign import automobiles. Long lines at gas stations caused by the 1973 Arab oil embargo ignited a switch from eight-cylinder gas-guzzlers to smaller, less-thirsty vehicles. Eventually, panic subsided, gas remained plentiful and relatively cheap, and we re-acquired the taste for powerful land yachts, then the SUV craze.

A question that should have been asked as soon as that phenomenon began, however, is one that now needs to be answered: Is the federal gas tax obsolete?

The problem created by more fuel-efficient vehicles is that cars with better gas mileage require less gasoline, which results in a reduction of gas tax revenue.  And the federal gas tax serves one primary purpose — to fund the building and maintaining of roads and bridges across the United States, America’s infrastructure.

Gas tax revenue has been on a steady decline for several years. When you combine this with the increasing need to bring our transportation infrastructure up to date, you quickly recognize a troublesome formula. The tax no longer pays for the cost of the upkeep. Between 2008 and 2010, the federal government has had to add an additional $30 billion to transportation funding. With increased fuel mileage, the growing use of hybrids, and the emergence of the electric car, the gas tax revenue can only go down.

The solution, so far, has been to raise the tax. The gas tax has been raised three times since 1980 — during the Reagan Administration in 1982, the George H.W. Bush Administration in 1990 and the Clinton administration in 1993. But increasing the tax simply puts off the inevitable discussion and decision on how to fund future transportation infrastructure.

You could make an argument that the gas tax has been the most fair tax and has actually been a user fee — the more you drive, the more of the tax you pay. If you drive a large eighteen-wheel truck, causing more wear and tear on the road, you get far less gas mileage and, therefore, you bear a larger share of the gas tax burden. But that has been changing. If you drive an electric car, for instance, you pay nothing to maintain the road infrastructure even though you are contributing to its wear and tear.

A Vehicle Mileage Tax (VMT) is an idea whose time has come to be debated. To put it plainly, instead of paying a tax on the fuel you use, you pay a tax on the miles you drive.

Those who support the idea believe that it is a fair way to distribute the tax burden. The ideas put forward include assigning a tax rate based on your vehicle. Theoretically, a large SUV would pay more per mile than a Smart Car since it weighs more and would have a larger impact on road deterioration. Supporters claim a VMT would at least stabilize the revenue stream for transportation spending and stop the increasing gap between revenue and need.

Opponents of a VMT believe that there are drawbacks, notably how to track the mileage. The idea of installing a GPS into every car that can track where you have been and home many miles you drive is drawing the wrath of civil liberties advocates.

Other ideas being floated are somewhat less controversial, such as placing a chip in your car/odometer that would be read every time you fuel your car. The chip determines how many miles you have traveled since your last trip to the gas station, and that tax is added to your gas purchase. Another idea would have the tax calculated when cars are inspected annually. (One problem with that is 14 states currently have no type of vehicle inspection.)

The issue isn’t about to be settled easily in today’s political climate, where even talking about a tax change draws fire. When the U.S. Department of Transportation last May proposed draft legislation to study — only study, mind you — a VMT, Republicans immediately attacked “President Obama’s new driving tax,” and the administration quickly disowned it.

What is clear is that the issue needs to be addressed, and soon.  The federal government cannot keep bridging the funding gap for infrastructure upkeep. And while today, only 3 percent of the cars produced in the United States are hybrids, that number is increasing every year. As this continues to happen, the funding shortfall based solely on a gas tax will grow even wider.

About the author: Christopher Hopkins, senior vice president of Aggregates and Mining for Saint Consulting, oversees all of the company’s work in the quarry and mining industries in the United States, United Kingdom and Canada. He is a regular speaker on overcoming the difficulties of permitting aggregate quarries and mineral mines before such organizations as the National Sand, Stone and Gravel Association, Ontario Stone, Sand and Gravel Association, the Northwest Mining Association, and the American Coal Council.  Hopkins has recently been appointed as an adjunct professor at the University of Arizona. Hopkins will teach a course about how to overcome community opposition and political hurdles when permitting a mineral mine.

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