Scrap the gas tax! It’s time to start charging drivers by the mile
On Jan. 1, 1990, Illinois raised its motor fuel tax to 19 cents a gallon from 16 cents a gallon.
It’s a tax that helps maintain roads, bridges and highways — the critical infrastructure of our economy.
And if you drove 12,000 miles that year — roughly what most people drive every year — in a passenger car that got 28 miles per gallon, the average back then, according to the National Highway Traffic Safety Administration — you’d have paid a little more than $80 in state gas taxes. That translates to about $160 in 2018 dollars, according to the U.S. Bureau of Labor Statistics inflation calculator.
Nearly 29 years have passed. Roads have continued to crumble. Bridges have continued to rust. And politicians have continued to quail at the idea of raising the gas tax to keep up with the rising prices of infrastructure repair.
If you drive 12,000 miles this year in a passenger car that gets 38 miles per gallon, the new and improved average, according to NHTSA, you’ll pay about $60 in state gas taxes — $100 lower in inflation-adjusted dollars, or 62 percent less, than you paid in 1990.
Very similar numbers apply to the federal gas tax, which has been stuck at 18.4 cents a gallon since 1993.
Simply raising the gas tax, as President Donald Trump and members of his administration proposed in 2017, is not an ideal solution to this chronic problem.
The increasing number of hybrid and electric cars on the road means that overall consumption of gasoline is continuing to fall, which means the burden of higher per-gallon taxes will fall even more disproportionately on those who can’t afford modern high-mileage vehicles.
A better solution — not ideal but better in line with today’s reality — is to scrap the per-gallon gas tax altogether and replace it with a mileage tax. Such a tax would turn every road into a toll road and has the potential to put the burden of maintaining and fixing the roads most heavily on those who use and damage them the most.
The notion has come up in the race for governor between Democrat J.B. Pritzker and Republican incumbent Bruce Rauner. More about that in a moment.
A vehicle-miles traveled (VMT) tax could be flexible — lower rates for lighter vehicles and rural residents; higher rates during rush hours or in dense urban settings — to encourage fuel economy and reduce energy-wasting congestion. Charitable uses and travel on existing tollways could be tax exempt. If set wisely and indexed for inflation in the cost of road repairs, a VMT tax could make hand-wringing about how to pay to fix our transportation system a thing of the past.
Yes, most of us would pay more, either directly through a VMT tax or indirectly through the higher costs of goods delivered by truck. But under such a user-pays system, what we pay would more fairly reflect the benefit each of us receives from having access to a smooth network of roads.
Are there drawbacks and pitfalls? Sure! The main concern about VMT taxes is the threat that implementing them poses to privacy. Measuring not only how many miles a person drives but where he or she drives requires the installation and use of GPS technology that theoretically allows The Man (or divorce lawyers or data-mining capitalists) to retrospectively map your movements.
Yes, some of that tracking can be done now with toll transponders and ubiquitous surveillance cameras, but the idea of the government knowing where your car is and has been at all times is a dilapidated bridge too far for many people. This is true even for those not committing crimes or headed to illicit assignations.
Deviously clever people would probably find ways to hack the system and avoid paying a VMT tax for all the miles they drive. Retrofitting every car on the road with devices that upload mileage data and equipping the state with the hardware and software to process that data and collect VMT taxes would require a significant upfront investment from a state already awash in red ink.
But some states and countries are already experimenting with various forms of this idea as they, too, see the purchasing power of their gas taxes plummet. Are there ways to wall off the GPS data and erase it as soon as it’s used for tax purposes? Would it work to take mileage readings annually or at the gas pump, and levy VMT taxes accordingly?
“I think it’s something we should look at,” Pritzker said of the general notion during a meeting with the Daily Herald Editorial Board in January. “We have to be careful about how it gets implemented,” he was quick to add, “and that’s why it should only be a test at this point.”
Rauner, cynically and opportunistically, has been exploding with indignation over this utterly sensible statement ever since. “Pritzker came out and said, ‘Let’s tax everybody by the miles they drive — let’s put a box in people’s cars — track how many miles when they drive to work, when they drive to school, when they go to the grocery store.’” he said during one debate. “That is big government, big taxing.”
“He wants a car tax,” seethed a Rauner campaign commercial. “How much is it going to cost us just to drive to a family member’s house?”
Rather than fight back — point out that Rauner has refused to consider raising the gas tax and has offered no ideas of his own for covering infrastructure repair (unless you count paying construction workers lower wages) — Pritzker has merely deflected the charge by saying, truthfully though misleadingly enough, that he “has never proposed a vehicle mileage tax.”
He won’t even defend his own notion, just as he won’t explain what his ideal graduated income tax system would look like.
Neither Pritzker nor Rauner is willing to endorse expanding sales taxes to a range of consumer services that are taxed in neighboring states, even though the service economy is growing. Neither is willing to support levying state taxes on retirement income, even though that’s done in all but three of the 41 states that impose an income tax and Illinois is facing punishing cash shortfalls.
If only there were a tax on cowardice. We could balance the budget with these two guys alone.
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Motor fuel tax revenue is being outpaced by the projects it needs to pay for, such as the recent $134 million reconstruction of the ramps connecting the Stevenson Expressway and Lake Shore Drive in Chicago.