LaHood Calls For VMT, New Taxes To Raise Funds For Infrastructure, As Gas Tax Runs Dry

Credit our sorely missed EIC/Editor Emeritus Ed Niedermeyer for being well ahead of the curve. B ack in 2011, Ed told me about how the rise of fuel efficient vehicles would create a revenue shortfall for the federal Highway Trust Fund, and that would lead the government to look at implementing all sorts of unpleasant things like a Vehicle Miles Traveled tax. Guess what Ray LaHood is proposing? You guessed it.

This isn’t the first time LaHood has proposed a VMT either. Back in 2009, he floated the idea as an alternative to raising the gas tax, which provides funding for the Highway Trust Fund, which is used to help maintain America’s roads. Now, LaHood is apparently telling the public that it’s in their interest to push the idea, according to The Detroit News

“Eventually people in the communities are going to persuade their members of Congress: We’re willing to raise taxes, we’re willing to pay tolls, we’re willing to go to vehicle miles traveled because we want better roads, better bridges,” LaHood said.

The big problem is that as Americans drive more fuel efficient vehicles, there is an increasingly large funding shortfall. There hasn’t been a raise in the gas tax since 1993, and Congress has spent $18.8 billion alone just to cover the shortfall for 2013-2014.

Last year, Congressional Budget Office estimated that to meet future highway needs between 2012 and 2022, the trust fund would need another $110 billion in funding. GAO says Congress could either hike gas taxes to 31.6 to 46.6 cents a gallon to fix the roads, or impose a 0.9-cent to 2.2-cent per mile tax on all travel.

The idea of a VMT, especially one tracked by GPS, is one that leaves civil libertarians in a cold sweat at night. Sources in DC tell us that a VMT essentially declared it a non-starter, not just for civil liberties reasons, but that the ROI would not be enough to justify implementing it. Nevertheless, a GAO report essentially endorsed a VMT scheme that could use GPS or other wireless transponders or prepaid “miles” indicated by a sticker on a vehicle’s windshield. Given how much the idea of the automobile is tied into the notion of personal liberty and freedom of movement, it’s hard to imagine this being acceptable to a vast swath of the American public. But something’s gotta give.

As Niedermeyer’s original report states, an increase in the gas tax (which occurred regularly from 1956-1993) is an inevitably, and the most sensible option as well. Though it would cause a hit to people’s pocketbooks, it would be the least intrusive option from a personal freedom standpoint, not to mention it would provide the requisite funding to keep America rolling.

Another side effect of a gas tax hike would be the increasing redundancy of CAFE. Rather than incentivizing auto makers to build hybrids, plug-ins, small displacement engines and increasing numbers of crossovers and trucks ( to get around various CAFE loop holes), a gas tax hike would incentivize more fuel-efficient vehicles, no matter what propulsion system they used. Even Bob Lutz is on board with said logic

You either continue with inexpensive motor fuels and have to find other ways to incentivize the customer to buy hybrids and electric vehicles, such as the government credits. Or the other alternative is a gradual increase in the federal fuel tax of 25 cents a year, which in my estimation would have the benefit of giving automobile companies a planning base, and giving families that own vehicles a planning base. Every time gas prices go back down, everybody starts buying big stuff again. Gas prices go up a buck, the big stuff is unsellable and everyone wants small cars. Go figure. It’s like the collective memory is about three weeks long. We can’t run a business that way.