Texas to study Vehicle Miles Traveled tax

Eventually replace gas tax?

Steve Hawley, Jan 05, 10.

The Texas Transportation Commission, which governs TxDOT, has directed the Texas Transportation Institute to study the feasibility of funding highway projects through a vehicle miles tax, according to the Houston Chronicle. Unless the current funding system, which relies on gas taxes, is altered, TxDOT will run out of money for new projects by 2012.

A vehicle miles traveled (VMT) tax would charge drivers for every mile driven, regardless of how much gas their cars consume. Federal lawmakers and officials in other states are also examining the possibility of a VMT tax. Gas tax revenues have been declining for two main reasons. First, gas taxes are not indexed to inflation, and lawmakers have been reluctant to raise taxes in recent years. Second, cars and trucks have become more fuel efficient over the last decade, decreasing the revenue generated, even though costs remain tied to the amount of miles driven.

State Senator John Carona of Dallas, who heads the Transportation and Homeland Security Committee, told the Chronicle that a VMT tax is an interesting idea but will not be implemented anytime soon. Carona favors increasing the gas tax, which has not been raised since 1991, but other state legislators are reluctant to do so.

The Chronicle reports:

Just how a vehicle-miles-traveled tax would be assessed is part of the study. It could be as simple as drivers writing a check when they have their vehicles inspected or could involve in-car technology to more precisely track mileage, perhaps tacking on a charge when drivers fuel up by communicating with the gas pump.

The latter would allow for such things as different charges for rural versus urban driving, and for deductions when people travel out of state, noted Ginger Goodin, the Texas Transportation Institute research engineer leading the study. She said, however, that privacy concerns quickly arise when such technology is discussed.

According to a recent Pew report, user fees such as gas taxes only fund 51 percent of the nation’s highway projects, down from 61 percent in 1997 and 71 percent in the 1960s. That means that increasingly, highways are being paid for by subsidies. According to TxDOT, not a single road in Texas pays for itself under the current gas tax system. Some Texas highways pay for about half of their costs, but most fall well short of that.

In April, the Texas Transportation Institute hosted a two-day symposium on VMT taxes, or in technical parlance, “mileage-based user fees.” According to the participants, VMT taxes face numerous challenges, including a skeptical public and reluctant political leadership. They expressed a desire for federal leadership on the issue, but noted that states may be able to move faster to implement the program.

Recap of Texas Transportation Institute VMT tax symposium
Closing discussion, VMT tax symposium
Pew report: Analysis Finds Shifting Trends in Highway Funding; User Fees Make Up Decreasing Share