Charging by the mile, a gas tax alternative, sees serious movement


The Illinois Department of Transportation is ready to build many more lanes and flyovers at the Circle Interchange, shown here in a postcard from 1963. Posted by Brandon Bartoszek. 

Because of vehicles with higher fuel efficiency, slightly less driving, and the gas tax not being changed since 1993, the motor vehicle fuel tax, or “gas tax”, has failed to pay for everything that Congress has legislated that it should pay for. The Highway Trust Fund, which includes the Mass Transit Account, has received several infusions of money from the “general revenue fund” – to the tune of over $60 billion.

But a new report from the Government Accountability Office, the congressional think tank focused on financing, past, present, and future, has made the country take a giant step forward in considering a switch to a fee that more accurately charges usage. The report, like all GAO studies, was commissioned by the House Transportation Appropriations Subcommittee*.

The gas tax charges drivers based on their use of petroleum, different vehicles can go different distances on the same amount of petroleum: essentially, some pay less than others for the same use of the road. Addiitionally, the counts of how much people drive has decreased (called vehicle miles traveled, or VMT), yet our demand for funds to maintain and build new infrastructure outpaces the incoming revenues from the gas tax. Lastly, the federal gas tax hasn’t changed at all, sticking to a cool 18.4 cents per gallon (for non-diesel drivers) since 1993. “While the gas tax was equal to 17 percent of the cost of a gallon of gas when it was set at its current level in 1993, it is now only 5 percent” (Streetsblog).

The Simpson-Bowles Commission, convened by President Obama to find strategies to improve the country’s fiscal situation in 2010, “called for an immediate 15 cent-per-gallon increase in the gas tax”.

An alternative to the gas tax is to charge people based on how much they drive, a mileage fee. This can be calculated in more than one way, and doesn’t require the use of a GPS system to track where people are going: pay-at-the-pump (or electric vehicle charging station), and prepaid, self-reporting system based on odometer readings.

From the report: “Mileage-­based user fee initiatives in the United States and abroad show that such fees can lead to more equitable and efficient use of roadways by charging drivers based on their actual road use and by providing pricing incentives to reduce road use.”

For example, mileage fees and other forms of road pricing such as tolling send clear price signals to road users, and provide incentives to drivers to consider alternatives such as public transit or carpooling which can reduce congestion, vehicle emissions, and overall spending on fossil fuels. The Congressional Budget Office (CBO) reported that most drivers currently pay much less than the full cost of their highway use, and that mileage fees could provide a better incentive for efficient highway use than fuel taxes do because the majority of highway costs are related to miles driven. In addition, we have reported that if those who benefit from a program do not bear the full social cost of the service, they may seek to have the government provide more of the service than is economically efficient. [emphasis added]

Streetsblog Capitol Hill has more on the General Accountability Office’s report. However, some commenters on that article are pointing out that switching to a VMT tax could be more trouble than its worth, or still wouldn’t cover the full impact imposed by larger vehicles on pavement. The GAO’s report, short of endorsing a switch, suggests further, serious study. Automobile insurance companies have been switching customers to “pay as you drive” (PAYD) charging since the middle of the last decade.


Any highway building or improvement project should be designed in such a way to prioritize and facilitate better transit operations. Photo of a CTA articulated bus on Lake Shore Drive by Kenneth Spencer. 

There are several projects planned to happen in Chicago that don’t yet have identified funding:

* This is a subcommittee to the House Committee on Appropriations; it decides how much money to spend. Its full name is United States House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies. While the surface transportation bill allocates money, an appropriations bill actually directs the federal departments to spend a specific (possibly different) amount of money.

16 thoughts on “Charging by the mile, a gas tax alternative, sees serious movement”

  1. I sincerely hope that the Circle interchange project doesn’t come to fruition. Increasing capacity will only bring more cars, not ease traffic.

  2. I guess I don’t get it. A gas tax is not only a much, much more efficient way to actually collect taxes then asking people to self-report their odometers every January 1, it’s a terrific proxy for the types of vehicle attributes that actually lead to wear and tear on roadways, like vehicle size (unlike miles traveled). Moreover, it isn’t clear to me why this is any better at encouraging efficient vehicles, or alternative transportation than just raising the gas tax. If there isn’t the political will to do that, why should there be the will to raise a “back door” gas tax?

    1. I agree — the gas tax is so easy to collect, with no issues of honesty. Trying to calculate a mile tax would just create an unnecessary headache. And like you said, it’s good to reward energy-efficient vehicles. if the gas tax isn’t enough to pay for the roads, we can consider raising the gas tax and finding additional revenue elsewhere. I think politically a milage tax would go over much worse than a higher gas tax — people are used to paying gas taxes just like they’re used to paying sales taxes on everything, and I don’t think they really notice how much of the price is the tax. If people had to send the government a check based on miles driven it would feel more painful and punitive, and politicians would have to deal with a lot of angry constituents.

    2. Completely agree. My little Civic does a hell of a lot less wear on the road than an Expedition. I shouldn’t be paying the same as those behemoths. Under the current gas tax, I don’t, because I get way better mileage. Just raise the gas tax.

        1. when an idea that favors theft is proposed, first they toss the idea out there , then work with the ‘opinion’ makers to alter the idea so the idea is ‘sellable’. it’s not premature to call a spade a spade. your trepidation or patience is merely cowardice or intellectual laziness at best, and deliberate promotion of dishonest fraud at worst.

          why o why is it premature to call a plan that favors fraud and inefficiency, fraudulent and stupid? please enlighten me with your patience.

          1. The report should not be evidence of the development of a spade. The report was commissioned by a legislator who was looking for ways to fill the gaps in the Highway Trust Fund.

            I didn’t read the report, but I wonder if the option of “spending less money so as not to need to make transfers from the General Fund to the HTF” was mentioned.

    3. One problem with a gas tax is that fully electric vehicles don’t contribute anything and hybrids arguably contribute less than their fair share (based on their weight.) In the short term, maybe its a good thing to subsidize the switch to these greener vehicles. Over the long term however, as more and more cars are hybrid/fully-electric, you end up with ever worsening problems of collecting revenue from a smaller and smaller percentage of vehicles.

    4. Agreed, the main problem with the gas tax is that it’s the only household cost that hasn’t changed in the last 20 years. The Simpson-Bowles Commision recommendation is only $0.04 more than a simple adjustment for inflation. Set the tax to automatically track the CPI to remove the issue of political will to raise the gas tax and the problem will be solved for several years.

  3. This just seems like a giveaway to Hummer drivers at the expense of Focus drivers. The gas tax already reflects mileage to some extent, as well as the damage done by gas guzzler vehicles. Plus, it’s like it’s designed to get people all hysterical about taxes. This sounds more like it comes out of some Grover Norquist front than the GAO.

    Just raise the gas tax. Better yet, base the tax on dollars spent, not the number of gallons.

    1. I agree. Switching to a percentage instead of a flat rate would be easier than a VMT tax and bring in addition revenue while still promoting the development and purchase of more fuel efficient vehicles (and less driving).

  4. you know there is a big big problem in society at large when the simplest most obvious solutions ( increase in gas tax) have been completely and utterly and deliberately ignored —made taboo—for decades, and the most complex perhaps bordering on ludicrous ideas —-are the ones that find themselves being promoted by some small elite clique of fiat-debt tower polite-academics.

    problems. even ‘smart’ people are highly susceptible to massive group think. the problem is that the smarter they are, the better they can convince themselves they are not influenced by delusion group think-tank clique think, and that there is a genuine logic to their disastrous proposed behavioralist experiments. there is only one way these ideas will go, towards failure. the real issue is how long can these people keep getting paid until their ideas finally fail.

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