LEARNER: Vehicle-miles tax would roll Hoosiers

Indianapolis is striving to become an electric-vehicles center. Gas tax revenue is declining, though, as people drive less and as more fuel-efficient new cars require filling up less at the pump. That saves people money, reduces pollution and lessens America’s imports of foreign oil.

However, less driving and more fuel-efficient vehicle technologies produce less funding for needed transportation infrastructure improvements that are vital to Indiana’s economic growth, public health and safety.

Many politicians oppose raising the motor fuel taxes. So, some states, like Oregon, are looking to shift from gas taxes to vehicle-miles traveled (VMT) taxes, which charge motorists based on how many miles they travel on the roads. An onboard vehicle device, using GPS or other technology, records the distance driven, assigns it to the appropriate taxing jurisdiction, and calculates the tax amount owed.

Proposed federal legislation (House Resolution 3638) would establish a Road Usage Fee Pilot Program, namely VMT taxes. However, this approach doesn’t work well in practice in Indiana and similarly situated states with the interstate highways driven by millions of out-of-state drivers. It would also penalize and undermine Indianapolis’ leadership on electric vehicles.

First, Indiana’s interstate highways are a crossroads—that’s different from coastal Oregon. Changing to VMT taxes would mean out-of-state drivers who now pay Indiana gas taxes on fuel purchases would instead get a free ride as they travel through. Indiana drivers would be forced to pay the entire VMT tax burden.

Why would Indiana legislators want Indiana taxpayers to further subsidize highway use for out-of-state motorists?

Second, VMT taxes would effectively penalize fuel-efficient cars, which exert less impact on highways than heavy trucks and SUVs. Why should a gas-guzzling Hummer, which causes much more wear and tear on the highways, pay the same VMT tax as a lighter, fuel-sipping Chevy Volt, Ford Focus, Nissan Leaf or Toyota Prius? Will heavy trucks pay their higher fair share?

The Congressional Budget Office’s March 2011 report comparing gas taxes and VMT taxes said, “Heavy trucks travel less than 10 percent of all vehicle miles, but their costs per mile are far higher than are those for passenger vehicles, and they are responsible for most pavement damage.”

CBO suggested that VMT taxes, if adopted, should be adjusted to recognize weight-per-axle in properly allocating highway wear-and-tear to the cost causers.

Third, VMT taxes would penalize new clean electric vehicles and hybrid cars that pollute much less than internal-combustion-engine and diesel cars and trucks, and thereby provide air quality, public health and other environmental quality benefits for everyone. That penalty—the VMT tax versus gas tax—is contrary to Indiana’s cleaner air goals and undermines Indianapolis’ efforts to become an electric-vehicles center.

Fourth, the current tax is simple and inexpensive to administer at the pump. The system is already in place. The VMT tax requires that fairly costly new technology be installed in vehicles, and a new administrative system be created. The costs of operating and auditing a VMT system are higher than collecting gas taxes.

If legislators are reluctant to raise gas taxes, why would the proposed VMT taxes be any more popular with the public? The gas and motor fuel taxes are both fairer and practically better suited to Indiana’s geography and needs.

For Indiana, the proposed VMT tax for cars is not the right tool to address transportation infrastructure funding challenges.•

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Learner is executive director of the Environmental Law and Policy Center in Chicago. Send comments on this column to ibjedit@ibj.com.