How is the highway system paid for? Car drivers need roads to drive on, or else those cars will be pretty looking pieces of art stuck in the driveway. While modern western countries today have extensive road and highway networks, unless the government highway administrations are funded those roads will eventually crumble into dust rendering our cars useless. What’s more insidious than cutting highway system funding to zero is to slash the budget to less than what’s needed to maintain and expand the system as needed. A starvation diet means highway maintenance will be lacking and we’ll see bridge collapses or other problems with the highways, like potholes the size of the grand canyon. Another issue is the global desire to drastically cut back or even eliminate fossil fuel use.
There are several mechanisms to fund the highway system. In the United Kingdom, there’s a flat fee per vehicle per year, the Vehicle Excise Duty
. One of the big-brother-like things they’re doing is to build a system of automated number plate recognition cameras whose purpose is enforcement of various criminal activities, including failure to pay the excise tax.
In the U.S., and some other countries, the gasoline tax has traditionally been used to fund the Department of Transportation. This strikes me as an extremely fair system because it’s anonymous, and the amount paid is directly related to usage. But, it’s also an extremely broken system because fuel efficiency increases (thanks to efforts to reduce air pollution) mean vehicles consume less fuel than before, meaning someone driving a modern gasoline powered car pays less fuel tax (a.k.a. road tax) per mile than they did previously.
In 1978 the U.S. average fuel economy for the vehicle fleet (CAFE) stood at 19.9 MPG. By December 2014 that figure had risen to 36.4 MPG, and it will continue rising thanks to government policies encouraging higher fuel efficiency – in turn because of national energy security, environmental and climate change concerns.
That means per car fuel consumption is a bit more than half what it was in 1978, meaning the government fuel tax revenue per mile driven is far less than it was in 1978.
In other words the current system is broken, and the current direction (in the U.S. anyway) for highway funding is an ever-increasing starvation diet. Fuel efficiency improvements – like the 54.5 MPG target by 2025 – will mean even less revenue per vehicle mile traveled if the funding is solely from gasoline taxes. To make it worse, electric cars are poised for a big leap in adoption and because their gasoline use is zero their owners contribute $0 to highway funding.
The response by state governments in some cases has been to levy taxes on electric cars while doing nothing to change the road taxes paid for gasoline powered cars.
In September 2012 the Plug-in Electric Vehicle collaborative wrote a position paper saying:
Nationwide, funding for the transportation system is under stress because motor fuel taxes are not indexed to inflation and have not been increased in decades. This has forced billions of dollars in deferred system maintenance. Flattening demand for petroleum fuels exacerbates the problem. While all road users should contribute to the transportation system, singling out electricity for new taxation will do little to solve the nationwide transportation-funding shortfall and could undermine the adoption of clean vehicles that reduce emissions and dependence on oil.
Unfortunately State Governments around the country didn’t listen to this advice, and instead some have enacted taxes levied specifically on electric cars. In some cases the taxes seem to have been punitive in nature, meant to delay electric vehicle adoption. For example, in Virginia Governor Bob McDonnell proposed eliminating the gasoline tax (enacting a wholesale tax on gasoline) and levying a tax on EV’s.
Also in 2012, the RAND Corporation published a study, Mileage Based User Fees for Transportation Funding, going over the problem and suggesting adoption of a very different method for highway funding. To charge fees based on actual miles traveled.
The gasoline tax – as flawed as it is now – does tax road use based on actual miles traveled. What screwed that perfect anonymous system is rising fuel efficiencies. And our long term goal is to eliminate fossil fuels anyway, but we need to recognize the key take-away that road taxes should be based on usage. Those who drive more should pay more.
The problem is – how would governments measure the miles traveled? For example, do we install tracking devices in our cars so the government knows everywhere we go and can bill us every month for miles traveled? In many areas bridge tolls are charged in such a way, a tracking device is carried in the car and the system automagically bills the car owner for bridge fees. But it means the government has tracking data for each car driver.
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Cue in the music for scary big brother scenarios.
In any case, I completely agree with the PEV Collaborative that the entire transportation system funding needs to be completely rethought given the new conditions that are developing. This funding needs to be divested from the gasoline tax. In its place should be some kind of across-the-board vehicle fee or miles traveled fee that’s charged equally for all drivers.
Additionally we must consider some kind of pollution tax.
Gasoline car owners have been getting a free ride on the side effects of gasoline consumption. Gasoline and diesel exhaust is known to be contributing to climate change, and to have toxic chemicals that affect health. Further the whole system of fossil fuels is extremely toxic, in chemicals being used, in accidents with crude oil, and in the politics surrounding fossil fuel operations in every country.
If there’s anything deserving a punitive tax it’s gasoline and diesel, not electric cars.
The system needs to change, to encourage electric cars while discouraging gasoline cars.
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