Discussion: View Thread

The fuel tax as a revenue collection mechanism at all levels of government has many positive attributes including: a very low cost of collection, administrative simplicity, and the fact that motorists are not involved in the actual collection process, they  simply “pump-pay-and drive away”. 

This being said, the fuel tax suffers from two very serious problems:  First is the fact that, at the federal level and in most states and local jurisdictions, these are flat taxes and the rates do not adjust with inflation.  This means that the purchasing power of these revenues has been and will continue to be eroded over time.  This has been addressed in a relatively small number of jurisdictions by indexing the tax rates to inflation so that they are periodically adjusted to recover the loss in purchasing power.  It should be kept in mind that the loss of purchasing power due to inflation is not unique to fuel taxes but is an issue that needs to be addressed in virtually every other transportation revenue mechanism including VMT Fees. 

The second big issue is the impact of increasing vehicle fuel economy.  This really started to become an issue starting in about 2008.  With federally mandated fuel economy standards, if fuel tax rates remain unchanged the amount of revenue collected per mile driven by the light-duty-vehicle (LDV) fleet (cars, pickups, SUVs) in 2025 will be about half of what was being collected in 2008.  This is not trivial since LDVs account for about 95% of the vehicle fleet and account for about 90% of all VMT.

To be viable, any replacement revenue collection mechanism needs to be as good as or better than the current fuel tax system on a number of key criteria including: total cost of collection; burden on the public, industry, and government; protection of privacy; user equity; and the ability to be applied in an environment with a mix of concurrent federal, state, and local fuel taxes.  Almost none of the current approaches to a VMT Fee collection system meet this test.

The movement to VMT Fees as a revenue collection mechanism will not by itself solve our current crisis in transportation funding. The reluctance by the public and political leadership to raise fuel tax rates to recover lost purchasing power due to inflation or to raise new revenue will still be issues for VMT fees.  Unless VMT Fee rates are set at levels that will collect from the average motorist significantly more than they are paying today through the fuel taxes the VMT Fee will replace, there cannot be significant increase in the revenue raised.  In fact, to the degree that VMT Fee collection costs exceed the cost of fuel tax collection, it is quite possible that the average motorist will have to pay more than they do today just to generate the same amount of net revenue. 

I am a proponent of VMT Fees but unless we can offer the public a VMT Fee collection system that is as good as or better than fuel taxes in every substantive regard, significant implementation in any US jurisdiction will always continue to be “ten to twenty years from now.”  If we can get past the hurdle of developing a viable VMT Fee collection system, the big fight will be where it has always been:  setting rates at appropriate levels to build, renew, operate, and maintain the transportation system our citizens need.

Good arguments and discussion.

Some concerns that people have:

- VMT tax will be an additional tax, and not a replacement for the gas tax

- Unnecessary data collection beyond simple odometer readings

- Who will have access to all that data?  The government?  Google?  And will they really “only look at the miles driven”?

- And will the revenue actually go to road construction and maintenance, or to every other non-highway project that can be remotely associated with highways? 

Similar to what has been said, the government mandated higher fuel efficiency vehicles and now wants to charge more taxes because fuel tax revenue isn’t keeping up!

A good article in the Los Angeles Times (26 October 2013 – “A black box in your car?  Some see a source of tax revenue”) summed up many of the issues.  It noted that the privacy issue is one that both the “Tea Party” and the ACLU have raised. 

Quotes from the LA Times article:

 “… the taxes could be rigged to change driving patterns in ways that could help reduce congestion and greenhouse gases…”

“Concerns about Big Brother and those sorts of things were a major problem [in a test project in Nevada]…  It was not something people wanted.” 

And the best quote from this article is “Nevada is among several states now scrambling to find affordable technology that would allow the state to keep track of how many miles a car is being driven, but not exactly where and at what time.”  Doesn’t that sound like an odometer?  Maybe an odometer is too simple, and wouldn’t account for driving on toll roads as has been suggested.  But loading more technology into vehicles isn’t always the best answer.

Perhaps a two-tiered tax system?  We could all pay a base tax just for having a transportation system available to use, and then pay by a combination of mileage AND axle weights.  As for the argument that the costs heavy trucks pay will be passed on to the consumers – it is already happening, but through a different tax structure, or just roads in bad condition.

The fuel tax as a revenue collection mechanism at all levels of government has many positive attributes including: a very low cost of collection, administrative simplicity, and the fact that motorists are not involved in the actual collection process, they  simply “pump-pay-and drive away”. 

This being said, the fuel tax suffers from two very serious problems:  First is the fact that, at the federal level and in most states and local jurisdictions, these are flat taxes and the rates do not adjust with inflation.  This means that the purchasing power of these revenues has been and will continue to be eroded over time.  This has been addressed in a relatively small number of jurisdictions by indexing the tax rates to inflation so that they are periodically adjusted to recover the loss in purchasing power.  It should be kept in mind that the loss of purchasing power due to inflation is not unique to fuel taxes but is an issue that needs to be addressed in virtually every other transportation revenue mechanism including VMT Fees. 

The second big issue is the impact of increasing vehicle fuel economy.  This really started to become an issue starting in about 2008.  With federally mandated fuel economy standards, if fuel tax rates remain unchanged the amount of revenue collected per mile driven by the light-duty-vehicle (LDV) fleet (cars, pickups, SUVs) in 2025 will be about half of what was being collected in 2008.  This is not trivial since LDVs account for about 95% of the vehicle fleet and account for about 90% of all VMT.

To be viable, any replacement revenue collection mechanism needs to be as good as or better than the current fuel tax system on a number of key criteria including: total cost of collection; burden on the public, industry, and government; protection of privacy; user equity; and the ability to be applied in an environment with a mix of concurrent federal, state, and local fuel taxes.  Almost none of the current approaches to a VMT Fee collection system meet this test.

The movement to VMT Fees as a revenue collection mechanism will not by itself solve our current crisis in transportation funding. The reluctance by the public and political leadership to raise fuel tax rates to recover lost purchasing power due to inflation or to raise new revenue will still be issues for VMT fees.  Unless VMT Fee rates are set at levels that will collect from the average motorist significantly more than they are paying today through the fuel taxes the VMT Fee will replace, there cannot be significant increase in the revenue raised.  In fact, to the degree that VMT Fee collection costs exceed the cost of fuel tax collection, it is quite possible that the average motorist will have to pay more than they do today just to generate the same amount of net revenue. 

I am a proponent of VMT Fees but unless we can offer the public a VMT Fee collection system that is as good as or better than fuel taxes in every substantive regard, significant implementation in any US jurisdiction will always continue to be “ten to twenty years from now.”  If we can get past the hurdle of developing a viable VMT Fee collection system, the big fight will be where it has always been:  setting rates at appropriate levels to build, renew, operate, and maintain the transportation system our citizens need.

Good arguments and discussion.

Some concerns that people have:

- VMT tax will be an additional tax, and not a replacement for the gas tax

- Unnecessary data collection beyond simple odometer readings

- Who will have access to all that data?  The government?  Google?  And will they really “only look at the miles driven”?

- And will the revenue actually go to road construction and maintenance, or to every other non-highway project that can be remotely associated with highways? 

Similar to what has been said, the government mandated higher fuel efficiency vehicles and now wants to charge more taxes because fuel tax revenue isn’t keeping up!

A good article in the Los Angeles Times (26 October 2013 – “A black box in your car?  Some see a source of tax revenue”) summed up many of the issues.  It noted that the privacy issue is one that both the “Tea Party” and the ACLU have raised. 

Quotes from the LA Times article:

 “… the taxes could be rigged to change driving patterns in ways that could help reduce congestion and greenhouse gases…”

“Concerns about Big Brother and those sorts of things were a major problem [in a test project in Nevada]…  It was not something people wanted.” 

And the best quote from this article is “Nevada is among several states now scrambling to find affordable technology that would allow the state to keep track of how many miles a car is being driven, but not exactly where and at what time.”  Doesn’t that sound like an odometer?  Maybe an odometer is too simple, and wouldn’t account for driving on toll roads as has been suggested.  But loading more technology into vehicles isn’t always the best answer.

Perhaps a two-tiered tax system?  We could all pay a base tax just for having a transportation system available to use, and then pay by a combination of mileage AND axle weights.  As for the argument that the costs heavy trucks pay will be passed on to the consumers – it is already happening, but through a different tax structure, or just roads in bad condition.

The fuel tax as a revenue collection mechanism at all levels of government has many positive attributes including: a very low cost of collection, administrative simplicity, and the fact that motorists are not involved in the actual collection process, they  simply “pump-pay-and drive away”. 

This being said, the fuel tax suffers from two very serious problems:  First is the fact that, at the federal level and in most states and local jurisdictions, these are flat taxes and the rates do not adjust with inflation.  This means that the purchasing power of these revenues has been and will continue to be eroded over time.  This has been addressed in a relatively small number of jurisdictions by indexing the tax rates to inflation so that they are periodically adjusted to recover the loss in purchasing power.  It should be kept in mind that the loss of purchasing power due to inflation is not unique to fuel taxes but is an issue that needs to be addressed in virtually every other transportation revenue mechanism including VMT Fees. 

The second big issue is the impact of increasing vehicle fuel economy.  This really started to become an issue starting in about 2008.  With federally mandated fuel economy standards, if fuel tax rates remain unchanged the amount of revenue collected per mile driven by the light-duty-vehicle (LDV) fleet (cars, pickups, SUVs) in 2025 will be about half of what was being collected in 2008.  This is not trivial since LDVs account for about 95% of the vehicle fleet and account for about 90% of all VMT.

To be viable, any replacement revenue collection mechanism needs to be as good as or better than the current fuel tax system on a number of key criteria including: total cost of collection; burden on the public, industry, and government; protection of privacy; user equity; and the ability to be applied in an environment with a mix of concurrent federal, state, and local fuel taxes.  Almost none of the current approaches to a VMT Fee collection system meet this test.

The movement to VMT Fees as a revenue collection mechanism will not by itself solve our current crisis in transportation funding. The reluctance by the public and political leadership to raise fuel tax rates to recover lost purchasing power due to inflation or to raise new revenue will still be issues for VMT fees.  Unless VMT Fee rates are set at levels that will collect from the average motorist significantly more than they are paying today through the fuel taxes the VMT Fee will replace, there cannot be significant increase in the revenue raised.  In fact, to the degree that VMT Fee collection costs exceed the cost of fuel tax collection, it is quite possible that the average motorist will have to pay more than they do today just to generate the same amount of net revenue. 

I am a proponent of VMT Fees but unless we can offer the public a VMT Fee collection system that is as good as or better than fuel taxes in every substantive regard, significant implementation in any US jurisdiction will always continue to be “ten to twenty years from now.”  If we can get past the hurdle of developing a viable VMT Fee collection system, the big fight will be where it has always been:  setting rates at appropriate levels to build, renew, operate, and maintain the transportation system our citizens need.

Vehicle Miles Traveled (VMT) has been promoted and discussed for many years now, but I prefer to keep things simple. Deterioration of highways/bridges is a function of the vehicle’s weight, moving across the surface. Coincidently, fuel usage (of any type) is a function of this same moving weight; the more weight moved, the more fuel required. Seems like a fair indicator for user fee assessment.

Although I am a proponent of the fuel tax as a means of collecting user fees, I recognize that equitable adjustments and updates should be made to fuel tax rates to better reflect the vehicles being used today.

Vehicle Miles Traveled (VMT) has been promoted and discussed for many years now, but I prefer to keep things simple. Deterioration of highways/bridges is a function of the vehicle’s weight, moving across the surface. Coincidently, fuel usage (of any type) is a function of this same moving weight; the more weight moved, the more fuel required. Seems like a fair indicator for user fee assessment.

Although I am a proponent of the fuel tax as a means of collecting user fees, I recognize that equitable adjustments and updates should be made to fuel tax rates to better reflect the vehicles being used today.

Vehicle Miles Traveled (VMT) has been promoted and discussed for many years now, but I prefer to keep things simple. Deterioration of highways/bridges is a function of the vehicle’s weight, moving across the surface. Coincidently, fuel usage (of any type) is a function of this same moving weight; the more weight moved, the more fuel required. Seems like a fair indicator for user fee assessment.

Although I am a proponent of the fuel tax as a means of collecting user fees, I recognize that equitable adjustments and updates should be made to fuel tax rates to better reflect the vehicles being used today.

Vehicle Miles Traveled (VMT) has been promoted and discussed for many years now, but I prefer to keep things simple. Deterioration of highways/bridges is a function of the vehicle’s weight, moving across the surface. Coincidently, fuel usage (of any type) is a function of this same moving weight; the more weight moved, the more fuel required. Seems like a fair indicator for user fee assessment.

Although I am a proponent of the fuel tax as a means of collecting user fees, I recognize that equitable adjustments and updates should be made to fuel tax rates to better reflect the vehicles being used today.

K. N. Gunalan, Ph.D., P.E., D.GE., F.ASCE

President Elect Nominee

Vice President AECOM

kngunalan@...

k.n.gunalan@...

(801) 718-9470

Linkedin/in/gunalankn

Facebook.com/gunalankn

Twitter:@gunalankn

Instagram: @gunalankn

Vehicle Miles Traveled (VMT) has been promoted and discussed for many years now, but I prefer to keep things simple. Deterioration of highways/bridges is a function of the vehicle’s weight, moving across the surface. Coincidently, fuel usage (of any type) is a function of this same moving weight; the more weight moved, the more fuel required. Seems like a fair indicator for user fee assessment.

Although I am a proponent of the fuel tax as a means of collecting user fees, I recognize that equitable adjustments and updates should be made to fuel tax rates to better reflect the vehicles being used today.

K. N. Gunalan, Ph.D., P.E., D.GE., F.ASCE

President Elect Nominee

Vice President AECOM

kngunalan@...

k.n.gunalan@...

(801) 718-9470

Linkedin/in/gunalankn

Facebook.com/gunalankn

Twitter:@gunalankn

Instagram: @gunalankn

Vehicle Miles Traveled (VMT) has been promoted and discussed for many years now, but I prefer to keep things simple. Deterioration of highways/bridges is a function of the vehicle’s weight, moving across the surface. Coincidently, fuel usage (of any type) is a function of this same moving weight; the more weight moved, the more fuel required. Seems like a fair indicator for user fee assessment.

Although I am a proponent of the fuel tax as a means of collecting user fees, I recognize that equitable adjustments and updates should be made to fuel tax rates to better reflect the vehicles being used today.