Tuesday, August 29, 2023

User Fees

Longtime readers know I spent years railing against Vehicle Miles Taxes because they were a solution in search of a problem that didn't yet exist. Actually they were a proposed solution for two problems: one was that people hate the gas tax, and two the eventual rise of EVs. The first was most ridiculous as the idea that because people hate the gas tax, we should levy an even more enraging tax instead, has some obvious flaws. And the second was that EVs did not exist at scale, would not exist at scale for many years, and still don't exist at scale.

Also, "fortunately," due to the rise of big vehicles, fuel economy improvements have basically stalled, so people are still buying plenty of gas.

Still the general problem is actually looming now, finally, even though VMTs as envisioned are likely not the best approach.
This seems like a recipe for disaster. Virtually stalking drivers on every single vehicle—how exactly are you going to get the device implanted on the hundreds of millions of vehicles already in use?—and extracting pennies per mile is probably the quickest way to inspire a revolt in this country, to say nothing of what would happen if that data were being sold or used for some other purpose. If you’re doing it instead during an annual inspection (which would have to be added in some states), you’re giving people one big charge per year instead of the micropayments they made at the pump. And if you just require people to list their odometer reading during annual re-registration, it would rely on people properly listing their mileage, which would be an enforcement nightmare.


The truth is that there are a number of unsatisfying options for essentially recreating the gas tax in an EV world. That’s especially true at a time when the climate crisis requires more EV adoption, not more taxes to blunt it. The option nobody wants to actually hear is to raise taxes generally and use them to fund infrastructure. We essentially did this in a roundabout way in the federal infrastructure bill, which didn’t rely solely on user fees but a panoply of (mostly gimmicky) taxes to create a new pot of money for infrastructure.
Raise gas taxes while you can is probably the best approach, but, well...