Pondering a mileage tax and a reduced federal role in transportation

By David Tanner, Land Line associate editor | Wednesday, April 24, 2013

During a hearing Wednesday about federal highway funding, the House Budget Committee asked panelists for ideas about replacing the federal fuel tax with a mileage-based user fee in the future – a fee that could charge truckers “exponentially more” than cars. The committee also pondered a congressional bill that would turn federal transportation decisions over to the states.

Committee chairman Paul Ryan, R-WI, opened the hearing but turned the gavel over to Rep. Scott Garrett, R-NJ, to chair the proceedings.

From the chair, Garrett promoted his bill, HR1065, that would allow states to opt out of the federal transportation program and keep the 18.4 cent-per-gallon gas tax to use as they see fit. It’s been called a “devolution” bill because it would literally devolve the federal role in transportation.

Not everyone agrees with the theory, including the U.S. Chamber of Commerce, which was represented at the hearing by Janet Kavinoky, the organization’s director of transportation and infrastructure.

“We strongly urge Congress to continue to reject cuts to federal program levels that would, in turn, pass the buck to states, localities and the private sector,” Kavinoky stated in testimony. “This option is tantamount to abdicating responsibility for interstate commerce, and ignoring the importance of connectivity and the value of a national system.”

The two other invited panelists, Richard Geddes, director of infrastructure programs for Cornell University, and Robert Poole, director of transportation policy for the Reason Foundation, said they supported Garrett’s intent.

Reps. Chris Van Hollen, D-MD, and Bill Pascrell, D-NJ, were vocal against the devolution concept.

“I would say that if we had done that in the past, we wouldn’t have the Interstate Highway System,” Van Hollen said. Pascrell added that he did not agree with anything in the bill.

When lawmakers brought up tolling and public private partnerships, Kavinoky said the Chamber did not have a hard position on tolls. He said tolling benefits only state and local governments and does not solve long-term problems facing the Highway Trust Fund. The organization supports public-private partnerships according to testimony.

The Highway Trust Fund will be $92 billion short within 10 years, the Congressional Budget Office announced Wednesday in its latest outlook.

“The current trajectory of the Highway Trust Fund is unsustainable,” the CBO stated.

Lawmakers debated ways to plug the hole, whether through decreased spending, increased taxes, or a combination of both.

The committee discussed the possibility of replacing the fuel tax in the future – sometime around or after 2025 – with a mileage-based user fee.

Poole referred to the fee as a toll on every mile traveled – with different rates for vehicles and accounting for rural or urban travel – but did not have a solution when asked how such a fee would be implemented without the use of tracking technology such as GPS on every vehicle.

Concerning mileage tax rates, Poole suggested 1 to 3 cents per mile for cars and between 5 and 8 cents per mile for heavy trucks. He added that heavy trucks could be charged “exponentially more” than cars under a variable-pricing concept.

Rep. Roger Williams, R-TX, raised the issue of vehicle cost due to the infrastructure, bureaucracy and vehicle technology needed to pull off a mileage fee for all vehicles.

Truckers are particularly concerned about the increased cost of doing business. The trucking sector currently supplies 30-40 percent of the Highway Trust Fund through the taxes and user fees they pay.

Truckers have already seen the price of new trucks increase between $20,000 and $50,000 due to EPA engine and emission requirements, and are set for another $6,200 increase once the first round of fuel mileage and emission requirements for heavy vehicles take full effect in 2018.

Those figures do not take into account the 12 percent excise tax truckers pay on heavy equipment, the tire tax, the heavy vehicle use tax (HVUT) or registration fees that truckers pay into the Highway Trust Fund.

For now, fuel taxes are not keeping up with the needs of the surface transportation system.

Among the panelists at the hearing, Kavinoky offered the simplest, but most politically challenging notion of the day: raising the fuel tax.

“The simplest, most straight-forward, and effective way to generate enough revenue for federal transportation programs is through increasing federal gasoline and diesel taxes – the one that is most often dismissed because the challenge is one of political will,” she said.

In prepared testimony, the American Highway Users Alliance, of which OOIDA is a member, said Congress needs to build on a series of reforms in the latest highway bill MAP-21, Moving Ahead for Progress in the 21st Century.

“Before arguing for more revenue to solve the program, we advocated for better policies to use existing revenue more responsibly,” Highway Users Alliance President Greg Cohen said.

“Taxpayers expect our highway investments to be used in a way that directly benefits the payer and minimizes waste, abuse, and bureaucracy as much as possible.”

Copyright © OOIDA

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