Maybe it is good that neither the US nor Canada can fix the fuel tax

I write here a lot about the need to shift from fuel-tax to a pay-as-you go road-use fees. A lot of people write about this.  Recently Jack Opiola wrote some more in ITSI (“Evidence buildingfor distance-based charging”). 

Opiola’s point is that we could increase acceptability by giving drivers 2 or 3 choices of methods to pay for road use rather than encourage hostility by mandating a single technology, namely GPS. He goes one further by saying: “the market place would supply the necessary technology and data collection services, certified to ensure the system works consistently. …the Government could contract the tax collection function to private companies, with competition driving down administrative costs. Government would provide oversight and certification of private sector providers to ensure fairness.”

On the way to the explanation, he points out a few things worth thinking through. I cherry-pick a few:
“Last month the (US) federal government announced a sizeable increase in the corporate average fuel economy (CAFE) standards for new vehicles, bumping the required average of 35.5 miles per gallon in 2016 to 54.5 miles per gallon by 2025. …this policy will have a devastating impact on highway funding if US Congress does not take corresponding action to identify revenue not based on fuel consumption.”

“…some cars on our streets already contain much of the technology to meet the new CAFE standards. Fuel efficiencies of many hybrid electric vehicles are approaching 50 miles per gallon and steadily raising the fleet averages. Now entering the marketplace are fully electric and plug-in style hybrids - Nissan's LEAF and Chevrolet's Volt, among others. Every major automobile manufacturer is preparing at least one electric, plug-in hybrid, or advanced hybrid model for market entry in the next two to three years.”

“These vehicles, capable of nearing or exceeding the calculated equivalent of 100 miles per gallon, will generate little fuel tax. It is estimated the entire fleet will need about 40% of the fuel it currently consumes, reducing tax revenue by about two-thirds.”

Increasing the fuel tax “would create an ever-widening inequity between owners of highly fuel efficient vehicles and those [that] pay a far heavier burden by continuing to operate conventional cars.”

“Alternative funding sources must be found to maintain the health of highway systems… Policymakers have considered replacements for the fuel tax, such as sales taxes, registration fee increases, personal or real property taxes, income tax, value-added tax, tolling high capacity highways, taxes on oil company profits and others.”

“But each shifts the burden of paying for the roads from one type of user to another or to non-users. In almost all of these cases, the proposed alternatives are less equitable than the current system.”

“The fuel tax is based on use, but its consumption linked formula is woefully out of date and not correctable.”

“Since two congressional commissions on transportation funding endorsed VMT as the most viable alternative to the fuel tax in 2008 and 2009, the US has done little to advance the discussions.”

The net of this is that in the next few years the structure of road-use funding via fuel taxation will remain unchanged and this will boost sales of alternative (non-fossil) vehicles, whereas shifting from fuel-tax to road-use fees now would dampen those sales. This is one case where government inability to act may have a partially-positive outcome. Although, Oregon might prove an exception.

Perhaps we should shelve the discussions about VMT tax and Mileage-based User Fees for a few more years. Technology will soon drain so much revenue from our highways and roads that a future government will have little choice, anyway.

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