Could Obama Ditch the Gas Tax?

A draft transportation bill calls for federal highway officials to investigate a system based on miles traveled.
by | May 5, 2011
 

The Obama administration may be considering a pilot program to determine the feasibility of taxing drivers based on how far they travel as opposed to how much fuel they consume, The Hill reports.

A draft transportation bill, acquired by Transportation Weekly before being published by the Capitol Hill newspaper, reveals some details of the proposal.

Currently, the nation’s highways are financed by the Highway Trust Fund, which gets most of its money from a federal gas tax of 18.4 cents per gallon of gasoline. The tax isn’t tied to inflation. As a result, it’s lost a third of its purchasing power since 1993, the last time it was increased.

Meanwhile, as Americans drive more fuel efficient vehicles, they're using less gasoline –- which means less money for highways and other transportation projects funded by the gas tax.

That confluence of factors has prompted just about every transportation expert to begin touting the idea of phasing out the gas tax in favor of a vehicle miles traveled fee, known as a VMT. The idea is that motorists should instead be charged base on how far they've driven, which would be a more representative "user fee" than the gas tax. The case for a VMT fee was bolstered by a Congressional Budget Office report released in March that also touted the system.

The administration's plan, contained in a draft transportation bill, calls for creating an office within the Federal Highway Administration that is tasked with analyzing alternative means of generating transportation revenue. The FHWA office would determine the feasibility of a VMT system, consider how a system would be deployed, and conduct tests on the system.

The proposal calls for field testing of a VMT system to be launched within four years of the bill's passage. The program would receive $300 million in funding over the next six fiscal years.

A White House spokeswoman downplayed the proposal, telling the newspaper that the draft “is not an administration proposal” and was merely “an early working draft proposal that was never formally circulated within the administration, does not taken into account the advice of the President’s senior advisors, economic team or cabinet officials, and does not represent the views of the President.”

It's also unclear whether the plan is still on the shelf, since the draft is undated. If it is, the plan would be a significant shift for the administration. As recently as March, Transportation Secretary Ray LaHood told said "we're not doing anything about it" when asked at an American Association of State Highway and Transportation Officials conference whether the administration was addressing the challenges facing the gas tax.

The draft transportation bill was circulated within the Department of Transportation and the Office of Management and Budget, according to The Hill, which also emphasized that it's not necessarily the final version of the bill that the administration would submit to Congress, and the administration might not submit any bill at all.

Researchers in as many as 16 states have studied the feasibility of a VMT system, but this would mark the first federal efforts.

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