LaHood Speaks Up for a Good Idea

(2/23/2009) - Ray LaHood, Obama's Secretary of Transportation, brought up a good idea last week.  He said, "We should look at the vehicular miles program where people are actually clocked on the number of miles that they traveled."

Press Secretary Robert Gibbs stated that, "It is not and will not be the policy of the Obama administration."  While I can see why the administration might want to take their time considering and developing such a proposal, or wait until the recession has subsided to implement the plan, it is regretful that they are dismissing it out of hand, for now and in the future, because the concept could offer numerous benefits.

The general idea is pretty straight forward - you tax drivers for the number of miles they drive.  Most press coverage has focused on a pilot program in Oregon, which recorded drivers' mileage using a GPS device and taxed them based on not only how many miles were driven, but by where and what time they drive.  According to the Washington Post, "Twenty-two percent of 300 participants drove less during peak hours. Most drivers said they thought the rates were reasonable; nine out of 10 said they preferred a mileage tax to a gas tax." 

Though some people have presented the mileage tax as a replacement for the gas tax (which is how it is proposed in Oregon), I think both are useful in different ways, and a combination of taxes could be used to promote different policy objectives.  A tax on gasoline provides an incentive to use less gasoline.  This can be accomplished in two primary ways: drive less and/or drive a more fuel efficient vehicle.  The mileage tax encourages driving less, but doesn’t encourage using a more fuel efficient vehicle.  Unlike the gas tax, the mileage tax can be increased when driving on certain roads at specific times when they are prone to congestion.  This encourages drivers to change their driving patterns and could save billions of dollars lost in congestion due to wasted fuel and lost time. 

There is a strong case for implementing one or both of these taxes even if global warming and peak oil were nothing we should worry about.  According to the Department of Transportation, “every $1 billion invested in transportation infrastructure generates $2 billion in economic activity.”  

Despite these needs, federal funding for roads and other infrastructure has been sorely lacking.  The Highway Trust Fund, primarily funded by the national gasoline tax (which hasn’t been raised since 1993), needed an additional $8 billion from Congress in 2008 to remain solvent.  Increasing the gas tax and/or adding in a mileage tax would help alleviate this gap. 

(Photo Credit: Svadilfari)