News
Fuel tax vs. mileage tax
OOIDA calling for fiscal responsibility, not another temporary fix

By David Tanner
staff writer

 

Highway users could someday pay taxes based on the miles they travel instead of by the gallons of fuel they consume.

But before the funding mechanism can be sorted out, trucking officials say the debate over federal transportation policy needs to be settled first.

A year or so before Barack Obama was elected president, members of Congress began holding hearings to figure out the next move for transportation policy and funding. Several committees began hashing over current transportation policies, including the Bush administration’s emphasis on tolling and public-private partnerships, to figure out where everything stands heading into the 2009 transportation funding reauthorization process.

The work continues.

At the very least, this is a chance for a fresh start on Capitol Hill for highway users and a chance for the Owner-Operator Independent Drivers Association to let members of Congress and the new administration know where truckers stand on issues of policy and funding.

So far, so good, OOIDA Director of Legislative Affairs Mike Joyce said.

“We appreciate being part of that debate,” he said. “It’s important that our membership has that voice in Washington.”

Discussions on Capitol Hill continue to revolve around the Highway Trust Fund, the current transportation funding mechanism reliant on federal fuel taxes and other highway user fees.

The debate over increasing the fuel tax is ever-present, but there is also talk about alternative methods of funding, including a tax on vehicle miles traveled, or VMT.

OOIDA officials believe a tax on VMT may be the way to go in the future, but for now the federal fuel tax and the Highway Trust Fund are sustainable and the most reliable way to fund transportation.

“We think ultimately VMT is where the highway funding issue will have to go, but the capabilities to do that aren’t fully developed yet,” OOIDA Executive Vice President Todd Spencer said.

OOIDA believes that current resources have been squandered or underutilized.

 “Before we talk about increases in the fuel tax, and before we talk about a tax on vehicle miles traveled, let’s talk about things we can address and change today, such as how resources are spent and how we come to a conclusion about what our priorities are,” Joyce added.

Very much a part of the equation in the funding debate will be a series of recommendations from the National Surface Transportation Policy and Revenue Study Commission, appointed by the president and congressional leaders.

Commissioner Tom Skancke supports the eventual shift to a VMT tax, but admits there are hurdles to get over before Congress and the president would consider scrapping the fuel tax.

 “If you’re going to do VMT, in my opinion, the government has to be the collector so there’s one technology and not 50,” Skancke told Land Line. In other words, the system should be federal and not carried out by the states.

Highway users and some powerful lawmakers have also raised the issue of privacy.

OOIDA members are among those who have expressed concern that a global positioning system, or GPS – the suggested method for tracking motorist data associated with a VMT tax – opens the door to a possible invasion of privacy.

 “It’s going to need a lot of development on the privacy side, before it can be done,” Joyce said. “There are constitutional questions of privacy that need to be overcome, and the perception that Big Brother is watching needs to be overcome.”

Skancke addresses the privacy issue by pointing out that GPS is already being used in many devices, including cell phones, satellite radio receivers and route-mapping devices.

 “If people are concerned about privacy issues, they need to take the chip out of their phones when they drive their car, and they shouldn’t sign up for things like OnStar or XM Radio,” he said.

A number of powerful lawmakers, including Senate Environment and Public Works Committee Chairwoman Barbara Boxer of California, say privacy issues must be solved before the committee signs off on a VMT tax.

Another major hurdle to clear before a VMT tax could ever be implemented is the fuel tax itself.

The Policy and Revenue Study Commission offers short-term and long-term recommendations on that issue.

The commission recommends that Congress approve significant but temporary increases in federal fuel taxes of 25 cents to 40 cents per gallon by 2015 before phasing out the fuel tax altogether by about 2025.

Admittedly, members of Congress have been reluctant to raise the fuel tax. The federal excise tax still sits at the 1993 level of 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel fuel.

Skancke said the short-term increase would be done in annual increases of 5 cents to 8 cents through the year 2015. By 2022 or 2025, Skancke sees the fuel tax being scrapped altogether as a VMT tax is phased in.

In the meantime, the fuel tax should remain viable, Skancke said.

 “In the very near term, the fuel tax is sustainable because the fuel tax is what Americans know, and is the most reliable way to fund programs,” he said.

Without a short-term tax increase, commissioners believe the Highway Trust Fund will continue to be strapped for cash to pay out to states for their transportation programs.

The Trust Fund already took a $3 billion hit in 2008 because Americans adjusted their driving habits as fuel prices soared and because more people took an interest in fuel-efficient cars.

OOIDA officials continue to promote an agenda of accountability and oversight at the federal level to keep the Trust Fund sustainable without the need for steep tax increases.

Spencer and OOIDA say a tax on VMT may one day be a reality, but it would be premature of Congress and the Obama administration to make the leap before the time is right.

 “We understand that we need to look at the fuel taxes that are collected on highways,” Spencer said, “and we are open to increases in those taxes, provided they are tied directly to highways and bridges.” LL

 

david_tanner@landlinemag.com

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