Via Politico:
Transportation Secretary Ray LaHood tells the AP that the Obama administration is considering taxing drivers based on the number of miles they drive.
“We should look at the vehicular miles program where people are actually clocked on the number of miles that they traveled,” LaHood said in an interview. “What I see this administration doing is this—thinking outside the box on how we fund our infrastructure in America.”
How we tax driving depends in part on what externality we feel needs to be compensated for. If we are taxing to compensate for wear and tear on infrastructure, then the purest way to measure one’s contribution is a function of vehicle miles driven and vehicle weight. But this does little to deal with environmental externalities based on tailpipe emissions, which would probably be best targeted as part of a carbon tax.
In either case, the tax form gets at the other issue to some degree. Though special efficiencies like hybrids will throw off the calculation, typically the further you drive and the heavier the car, the more you will pollute, so taxing either side will get at the other. The question is which externality we are more concerned about, because if we tax vehicle miles instead of gas usage, one loses a bit of the incentive to drive more efficient vehicles. We could of course tax both so that each area gets its own pot of money.
One concern here is that the move seems political more than based on economic sense. Apparently a vehicle miles tax would cause less angst because it would remain largely consistent over time while the gas tax (which itself would remain constant) is tied to overall gasoline prices which change a lot and get people in a tizzy, leading to politicians proposing inane ideas like a gas tax holiday. This may be true, but it isn’t a great economic argument.
In fact the better economic argument comes via transaction costs. It is much more difficult to measure vehicle miles traveled and car weight. They could probably get your car weight through your registration records (if they know your make/model/year, they can find out what the weight of that vehicle is). But to know vehicle miles traveled you either need to have someone check your odometer every year (or however often the tax is administered) or they need to install a chip that reports this information to them. Either one accepts an expensive bureaucratic option, or an intrusive technological one. Meanwhile, tracking gas usage is extremely easy, they can just tack the tax on at the pump.
Considering how much easier a gas tax is compared to a vehicle miles tax, and the fact that a gas tax both measures through proxy the relevant calculation of vehicle miles and provides stronger incentives for pollution reduction, it just seems pointless to make this switch.
