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2007 Annual Forum
View Abstract
Is a Vehicle-Mile Tax a Viable Alternative to the Fuel Tax?: Socio-Economic and Distributional Impacts
B. Starr McMullen, Oregon State University
Lei Zhang, Oregon State University
Given the dependence of the U.S. economy on the transportation of both people and goods on the highway system, the continued maintenance of the highway system is a major priority to policymakers. The Federal government and most states collect highway user fees from vehicles though the use of a fuel (gasoline/diesel fuel) tax, registration fees, and a variety of excise taxes. For light vehicles such as cars, motorcycles, vans, pickups, and sports utility vehicles (SUVs), fuel taxes are the primary source of highway funding at both the Federal and state level.
In recent years, highway user fee revenues have not increased at a pace sufficient to meet the increasing costs of highway infrastructure. The predicted downward trend in revenues collected from the gas tax as the popularity of fuel-efficient hybrid vehicles and alternative-fuel vehicles continues to grow, is a concern to highway planners. Accordingly, policymakers at both the state and Federal levels are exploring alternatives to the gasoline tax (TRB project 2062, in progress and the Oregon Road User Fee Task Force, to name two examples.)
A vehicle-mile tax is a leading contender to replace the fuel tax as a highway user tax for light vehicles. However, there still remains the issue of exactly what rate structure to adopt. Preliminary media feedback has focused on the (dis)incentives such a tax would provide to the adoption of more fuel efficient vehicles, and questions have also been raised regarding equity issues. The tax could conceivably be designed in various ways — a flat rate, a graduated rate or a rate that might be applied only to high mileage vehicles, as defined by policymakers. In setting a rate structure policymakers need to consider road financing objectives as well as equity issues and environmental/energy concerns. In addition policymakers must consider the impact of alternative fee structures on social, regional or income groups.
The purpose of this paper is to provide a review of the existing literature dealing with the socio-economic and distributional impacts of gasoline and vehicle mile taxes to gain insight into the distributional consequences of replacing the gasoline tax with the vehicle mile tax. This should provide a preliminary framework from which to evaluate and alternative vehicle mile fee schemes.
Related Links
- Download Paper (PDF, 48K)
- View the 2007 proceedings