Experience with VMT Tax Pilot

Portland State University
Center for Transportation Studies
Spring 2008 Transportation Seminar Series

Speaker: Anthony Rufolo, Professor, Urban Studies and Planning, Portland State University

Topic: Behavioral Responses to Oregon’s Mileage Fee Experiment

When: Friday, April 11, 2008, 12:00-1:30pm

Where: PSU Urban Center Building, SW 6th and Mill, Room 204

0 responses to “Experience with VMT Tax Pilot”

  1. Help me understand why VMT taxes are good. At least with the current, tax-per-gallon-of-gas system, we’re taxing drivers of 15mpg Hummers at a higher rate than we’re taxing drivers of 60mpg Geo Metros. Why in the world would we want to tax them at the same rate? It is a disincentive to conserve.

  2. Dave,
    There are a few benefits to a VMT instead of fuel tax:

    There is concern that as more hybrid/electric vehicles come to market, gas-tax revenues will decline while actual road use remains flat/rises. The gas tax is tied fundamentally to a fossil-fuel economy that (obviously) many people would like to move away from.

    Also, the gas tax isn’t linked in any way to inflation – it’s a fixed cash amount for a fixed amount of gasoline. So even if the amount of traffic on our roads stays constant, our purchasing power to maintain those roads declines.

    Furthermore, in Oregon its been incredibly hard to pass any increase in the fuel tax – it hasn’t been done since 1991 due more or less to voter opposition.

  3. I highly recommend seeing this lecture. If not in person, then by video. PSU streams all of these Friday lectures on its website, and then archives them for later viewing.

    The current gas tax actually favors Hummers and other large, private vehicles. A Hummer may use twice as much gas as a Geo Metro, but it also weighs three or four times as much as a small car. This means that the road and bridge system has to absorb three or four times the wear and tear that a small car would, with only twice the amount of road fee revenue generated.

  4. Lance –

    Is it a VMT tax (vehicle miles travelled), or a weight-mile tax that is being discussed? I can see how weight-mile would still encourage smaller, lighter vehicles (which mostly correlates to more efficient, but not always).

    But I think there’s a problem with the argument that a public which is seemingly against raising the current gas tax would be supportive of a shift to a completely new system of taxation. (Especially if it involves installation of specialized equipment in one’s existing vehicle.)

  5. The VMT Tax is certainly one of those things that is technically interesting, but I have to agree with Bob, it is politically unlikely.

    One of the big things that would happen when congress or whoever got it’s hands on it would be to do things like add incentives for hybrid cars, (look at London’s congestion charge: Hybrids don’t have to pay. As such, hybrid use in London has skyrocketed, not because people care about the environment, but because they want to save $9/day. Likewise, a lot of the hybrid ownership in SoCal was driven by the fact that they could use the carpool lanes with single drivers.) And that is fine, but is kind of defeats the purpose, we already have a system where hybrid pay less, it is called the gas tax. Also, they seem to believe the VMT charge would be automatically linked to inflation. That is great, but why don’t we just link the gas tax to inflation right now? They could also link the gas tax, (right now,) to the CAFE standards, so that as cars get more efficient, the gas tax automatically goes up as well. The reason we haven’t done those have to do with political will, not technical considerations. But the big issue is one of cost: The devices cost $200/car. Instead of having people pay $200 to buy these things for each car, it would be much simpler for everyone to simply give that $200 to ODOT and then stick with the current gas tax. Yes, Hummer drivers would pay a little more, and Geo drivers would pay a little less under that plan than under a VMT plan, but the big thing is that ODOT would have a lot more money, ($200/car with about 3M cars in the state, and the average car is 7 year old -> $200*3M/(7*2) = $42M/year,) than they would under the VMT plan.

  6. So in an ideal world where we could levy any tax with zero friction, what would the best taxation system look like?

    Taxing proportional to road damage (hurts trucking) carbon (hurts guzzlers) and other pollutants (hurts 2-stroke mopeds (popular here! why?!)). Taxing proportional to danger to other road users?

  7. Dave:

    Roadway damage:
    It goes up by weight divided by the number of axles to the 4th power, so a 2 ton car does 16 times more damage than a 1 ton car. If we assume the 2 ton, 2 axle car is currently paying it’s share of the roadway damage at 1.5 cent/mile, then a 20 ton semi truck on 5 axles should pay about $4/mile. Right now, the trucks aren’t paying anywhere close to that, (they have good lobbyists,) and if they did pay their share then it would be obvious that the cars are actually paying too much at 1.5 cents, so the real numbers might be more like 1 cent/mile for cars, and $3/mile for 20 ton trucks, but that is roughly what that part of the equation looks like. (A bicycle does less than a 1 cent/year even if the rider never sleeps or eats or otherwise stops.) Yes, that hurts trucker, but it doesn’t really hurt freight movement: There are much cheaper ways to ship heavy things long distance than the interstate highway system right now, so that only really works out to $3/mile for the last few miles of the trip, with the rest being done by train/boat/whatever. However, there is also the capacity issue: A single semi truck takes up about the same amount of room on the road as two cars, so the truck should simply pay double, (and not 300 times,) the cost of any roadway expansion project, and since some of the gas tax “maintenance” money is being spent on roadway expansion, we’d need to break those apart, and that might put the cars charges at 2 cents a mile instead of 1, although the trucks would still be very close to $3/mile. Ultimately, capacity should be handled as a congestion charge, and many of those are in the $5-$10/day category in the central city.

    There is also parking, and people have written whole books about that, but the estimate says that we should charge somewhere around $100k/car for all the parking spaces that go with them. (That isn’t a typo, read “The high cost of free parking.” (In Japan you actually have to own a parking space in order to license a car, in much the same way that we require proof of insurance.)

    The gas tax is not a carbon tax, and if we wanted to add that to the gas tax, that is in addition to the roadway damage/capacity issues. In 1991, Sweden passed a carbon tax at $100/ton, and there are 19 pounds of CO2 in a gallon of gasoline, so that is $.95/gallon, or 4 cents a mile at 25 mpg. For a 12,000 mile/year driver, that works out to $450/year, and while that may seem high, it quite a bit cheaper than dealing with the damage from global warming. As such, Sweden has since decided that the carbon tax is too low, and have raised it to $150 in 1997, and have discussed raising it again recently.

    Danger to others:
    In theory, insurance rates should reflect how much danger you are to other roadway users, although most people only have a hundred thousand in insurance, not the $2-3M that taking people’s lives actually costs. But liability coverage alone ran me $500/year, back when I drove 12,000 miles/year and I have a perfect driving record, so that is 4 cents a mile for a safe driver in a fairly safe car, and it would probably go up from there. Of course, not all miles are equal: Freeways kill far less people per mile than downtown or 82nd, so…

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