Replacing the Gasoline Tax? Not Now!

( Two HT's Drudge). Joan Lowy of the AP, writing for Newsday.com in an article titled, "Obama nixes plan to tax motorists on mileage," reported that President Obama, through his press secretary, rejected his transportation secretary's plan for a vehicle miles-traveled tax (VMT).

President Barack Obama on Friday rejected his transportation secretary's suggestion that the administration consider taxing motorists based on how many miles they drive instead of how much gasoline they buy. "It is not and will not be the policy of the Obama administration," White House press secretary Robert Gibbs told reporters, when asked for the president's thoughts about Transportation Secretary Ray LaHood's suggestion, raised in an interview with The Associated Press a daily earlier.

In an article written earlier the same day, "AP Interview: Transportation secretary says taxing how much we drive may replace gasoline tax," Lowy provides details of the rejected plan to replace the gasoline tax in the not too distant future.

The system would require all cars and trucks be equipped with global satellite positioning technology, a transponder, a clock and other equipment to record how many miles a vehicle was driven, whether it was driven on highways or secondary roads, and even whether it was driven during peak traffic periods or off-peak hours.

The device would tally how much tax motorists owed depending upon their road use. Motorists would pay the amount owed when it was downloaded, probably at gas stations at first, but an alternative eventually would be needed.

Transportation Secretary LaHood believes that new tax revenues will become necessary as drivers switch to hybrid or electric vehicles that create wear and tear on roads and highways, but largely avoid the gasoline tax. The administration seeks to reduce oil use, and the more successful they are in encouraging drivers to switch to alternative fuel vehicles, the greater the shortfall in funds raised by the gasoline tax.

I believe that most economists would like the VMT tax. Like a gasoline tax, it taxes high mileage drivers more. It can also be administered to tax less small vehicles that are kind to roads, and all vehicles. Finally, it can be set to tax those who drive at peak traffic hours more.

As a peak hour driver, the tax would not be kind to me, but it would be good for society. It would create incentives to drive during non-peak hours, reducing congestion, pollution and commute times. For example, employers would have incentives to alter work days to reduce taxes they pay on their vehicles, and their employees pay driving to work. Doctors' offices might open earlier or stay open later. Some employers may switch to ten hour, four day work weeks.

I might add that taxing snarky hybrid drivers who avoid much of the gasoline tax that support highway maintenance is commendable also an advantage of the VMT tax. Taxing non-snarky hybrid drivers not enjoyable, but it is fair.

Why is the Obama administration unwilling to consider taxes that will be necessary if their efforts to reduce oil consumption succeed? I offer two guesses. First, the tax would be unpopular with voters who fear loss of privacy, and an additional tax on driving. Second, the gasoline tax is a type of carbon tax, subtly reducing the cost for those who have switched to alternative energy powered vehicles relative to those who have not.