Resisting the increase in motor fuel tax

After my critique of Congressman Oberstar’s highway revenue comments at Humphrey, a colleague wrote:
… I believe that your support for a VMT based fee and your opposition to increasing the motor fuel tax (a view you share with Ed Regan as a recent article noted and quoted), in my view, are deficient as they fail to relate to goals and objectives. What are you trying to achieve? For example, would a VMT based tax discourage use of petroleum for motor fuel? Would it help get rid of polluting clunkers? Etc. - MH
My objective is to most effectively achieve the tax shift from gas-use to road-use. But my utopia and the US surface transport reality are two different places. There are three ways to argue the “tax the road” vs “tax the fuel” conundrum in the immediate, US circumstance.

Tax the road
This argument, repeated ad infinitum, says that paying by time-of-day, distance, place and vehicle type (IF private, secure and affordable to collect) is the “economic-man” solution – i.e., economically optimal. This needn't be repeated, because the creeping, green-force, electrification of our fleet will turn the tax-ship, rather than the platitudinous Adam Smith arguments. In other words, Obama’s investment in battery technology will do more to force the TDM-pricing-solution than any bleating blogger.

Realistically, “tax the road” – i.e., “tax all the roads, everywhere” – while feasible technically by 2011 (in my opinion, and using now-developed technology), is not feasible logistically for perhaps 3 or 5 years, more importantly, it will not be feasible politically in a single, wrenching shift, ever. The Dutch shift is five years long, hasn’t started, its jury is out, and Holland ain’t America. Even, if I was the president of the United States and both the house and senate were all of my party, it would still take me ten years for the full shift. So “big picture” VMT charging is for the next administration (or the next, or the next, as Oberstar so clearly pointed out in a part I did not transcribe). So while I, Ed Regan and many others may strongly favor this solution, we have not found a convincing path to get there, yet.

And the total progress made since the February 2009 release of the NSTIFC report, taking everything into account, has been zero (not including any incremental profits realized by the pulp and paper industry…).

Tax the gas a bit more
Not only is this the most transparent route and the fairest in the immediate circumstance and it is the one that will happen after about two or three more general fund bailouts – i.e., circa 2011.

Every gas tax increase, every RFID gantry that is installed, and every general-fund bail-out begged and granted, cements the wrong tax architecture in place and delays the day of solution. As Mary Peters put it: “Relying on the gas tax is like relying on cardboard to keep the rain out – the longer you use it the less it works.”

General Fund Bailout
This is the easiest, most uncomplicated, and now-habitual route. It is the one we will use this time and twice more, before a sufficient number of people get that it is unsustainable AND that the problem is not going away.

And I hope President Obama makes me eat my words in his second term.

As to discouraging the use of petroleum-based fuels and clunkers, this is handled by setting different road use fees for different vehicle types -- when the time comes. And if you must, you can still provide incentives.


Rob Dawg said...

The solution is to incrementally increase the fuel excise tax until the logic of time/distance/location cost assignment is understood.

The problem still remains that an honest assignment means the cenurban areas and the extreme rural areas are in for uncomfortable cost increases.

Bern Grush said...

True, the cost to drive in congested areas ('conurban?') will go up. But there is no need for them to be uncomfortable. Indeed that would be a mistake and would harm our cities. They only need to be fair and to discourage peak hour traffic.

I disagree completely re rural. The cost there need not increase and can even come down. If a rural driver currently pays 2 cents/mile in fuel tax, they may not need to pay more. If they do, it should be very little. To overcharge would have the trucking lobbyists questioning why. Most rural traffic is trucks.

All these concerns are fear based. The fear and paranoia may be well deserved, given the history of government behavior, but the economics are otherwise.