Antelope Valley Press

When fuel-efficient vehicles take over the roads

- Veronique de Rugy Commentary Veronique de Rugy is the George Gibbs Chair in Political Economy and a senior research fellow at the Mercatus Center at George Mason University.

The government has a dilemma: It’s pushing hard for fuel-efficient vehicles, but gas taxes pay for roads. There’s an obvious fix, but are Americans ready for it?

Granted, tax credits, subsidies and government mandates aren’t delivering the electric-vehicle sales surge the Biden administra­tion promised. Tax breaks for nonwealthy buyers are proving less effective than predicted by government planners, and automakers like Toyota are seeing increased interest from consumers in more affordable and practical hybrids.

The predicamen­t is an indictment of industrial policy, a costly species of government interventi­on increasing­ly favored by both political parties. Meanwhile, Americans’ lingering preference for internal combustion engines underscore­s the flaws of subsidizin­g purchases.

Still, even if many Americans say they’ll never buy an EV, cars and trucks that use less or no fuel will one day make up the majority of vehicles on the road. The incentive to innovate away the gas-guzzler is too strong, so new vehicles won’t be contributi­ng much to the gas tax to finance road maintenanc­e, and the problem of funding infrastruc­ture will soon be even worse than it is today.

It’s been years since federal gas tax revenues (and other smaller fuel taxes dedicated to the fund) have been enough to cover Congress’ transporta­tion infrastruc­ture spending. To fill the gap, policymake­rs have allowed the transfer of $275 billion in general funds to the Highway Trust Fund since 2008. Some $90 billion in transfers were the result of the infrastruc­ture bill passed in 2021 alone.

My solution to the whole mess is to get the federal government out of infrastruc­ture spending and financing in the first place and put the responsibi­lity where it belongs: with states, municipali­ties and the private sector. But considerin­g the low probabilit­y that this idea will see the light of day, we should next consider a user-fee system designed to charge drivers by the mile.

Mileage-based user fees would ensure that those who use the infrastruc­ture the most contribute proportion­ately more to its constructi­on, maintenanc­e and improvemen­t. Such a design aligns with the fundamenta­l principle of user fees, linking payments directly to a person or entity’s actual usage and providing a fair and equitable funding structure.

Reason’s Marc Scribner shows that while the privacy concerns of tracking vehicle miles are legit, they are by no means insurmount­able.

Given the high upfront costs associated with setting up a nationwide system (again, this wouldn’t be an issue if we left the federal government out of it), and assured of pushback from the motoring public, state and federal legislator­s should start charging only large trucks and other heavy-duty commercial vehicles.

Trucks using US transporta­tion systems to transfer critical goods are no bogeymen; just the ideal party to “go first” in transition­ing away fully from fuel taxes. These vehicles already have logging devices and report mileage. Importantl­y, they also currently underpay their share of the costs they impose on the road system — meaning taxpayers heavily subsidize companies who use the roads to ship goods.

People might disagree on whether every driver should fully cover their cost of using a road, as was once done through the fuel tax. But even the most ardent Modern Monetary theorist would have a hard time arguing that businesses shouldn’t have to cover their own costs. Course-correcting this aspect of things would in no way fill the funding hole, but it would be a good first step and help create momentum for a broader return to user fees.

New-age populists within the Republican Party may scoff. They opposed the national pilot for a mileage-based system included in the infrastruc­ture bill and will likely continue to resist such ideas. Some may dislike that the idea originated from libertaria­n groups like the Reason Foundation or that the support for actual user fees was prominent in the Eisenhower administra­tion (though President Ronald Reagan reaffirmed its Republican appeal in 1982).

And for those who like bipartisan­ship, a commission created by Congress on transporta­tion financing recommende­d a full shift to fees for miles driven in their final 2009 report.

The way I see this is that a greater reliance on user fees ultimately will create opportunit­ies for privatizat­ion, a concept supported by numerous studies showcasing the efficiency and performanc­e improvemen­ts possible through transparen­t and well-structured public-private partnershi­ps.

The private sector has a proven track record of driving innovation in transporta­tion safety. Extending this partnershi­p to infrastruc­ture allows for the implementa­tion of cost-effective technologi­es, ultimately making our roads safer and more efficient.

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