(Michael Chamberlain/Nevada Business Coalition) – After years of government policy designed to save the planet by offering tax breaks and credits and every other form of inducement for people to use more fuel-efficient vehicles, it turns out those Prius drivers may not be so patriotic after all.
Because less gasoline is being purchased, governments all across the country are finding themselves receiving less revenue to use for road repair and construction. Now they’re looking for a way to make up the difference.
Recently the Nevada Department of Transportation (NDOT) held a public meeting to obtain comments on a proposal to implement a Vehicle Miles Traveled (VMT) fee to replace the current gas taxes. This was part of the second phase of a three-phase study begun last year.
Generally, user fees are superior methods for governments to collect revenue than are taxes. Taxes force people who neither want nor need nor use something to, nevertheless, pay for it. This tends to contribute to the growth of government.
For instance, say the city spends taxpayer money to build a baseball park. Soccer enthusiasts may then feel entitled to a soccer park, which may prompt lacrosse players to demand a lacrosse park, resulting in basketball players lobbying for more public hoops and so on and so on and so on.
Seeing all these sports parks, music lovers may then demand an amphitheater or public opera house or one (or many) other taxpayer-funded facilities to indulge their chosen form of entertainment. Inevitably this leads to 9-figure performing arts centers and 10-figure sports stadiums built at taxpayer expense.
When all is said and done all of them would likely have been better off simply to have paid for their own amusement rather than forcing everyone to pay for everyone else’s.
To some people, this is not a bug but a feature – all the better to concentrate the money and grow the power and influence of government. For those of us who believe the government should not and cannot be all things to all people, the better system is one in which the people who use the services provided by government are also the ones who pay for them.
So, theoretically, a fee charged per mile driven would be a superior method of collecting revenue to pay for road repair and construction than a tax on gasoline. However, we all live in the real world and there are real world problems with implementing and collecting this fee.
NDOT had Phase 1 of public comment last year. Their initial plan proposed installing tracking devices on vehicles. That idea resulted in a firestorm of opposition.
As a result, in the current Phase 2 NDOT stressed as often as possible that there would be no collection of data on vehicles or travel habits or location and all data would be collected through simple odometer readings. However, as I said, we live in the real world and things are never as simple as we would like them to be. So while they’ve made honest and real efforts to allay privacy concerns there are still reasons for skepticism.
But I’ll return to that later. There are other significant problems as well.
Taxes Never Go Away. The idea behind the VMT fee is that it will replace the current fuel taxes. Our experience tells us that will be much easier said than done.
Most of us have probably heard the story about the phone tax implemented to help fund the Spanish-American War in 1898. It was finally ended in 2006, 108 years after the end of the war.
While they may have every intention of phasing out fuel taxes, it’s more likely we’ll end up with both the fuel tax and the VMT fee.
Political Manipulation. One of the main reasons for the VMT studies, in Nevada and a number of other states, is that the current taxes are not keeping pace with the rising cost of road construction and repair. In large part this is due to the prevalence of better fuel efficiency.
In large part, this is due to manipulation by politicians and bureaucrats that use both carrots and sticks to get people to use less gasoline and diesel. These include government policies requiring people to drive more fuel-efficient vehicles and encouraging them to choose electric, hybrid and alternative fuel vehicles. Government policy to promote fuel efficiency has the consequence of generating less money in fuel taxes.
Does anyone believe these same people will give up their attempts to promote what they see as good policy designed to save the planet? An electric car still has to fill up somewhere just not at a gas station. The owner has to plug it into the wall to charge the battery.
The electricity that charges this battery is already taxed. So if we remove the gas tax, the electric vehicle owners will be paying the mileage tax plus the tax on electricity, which most likely comes from a dirty coal-fired power plant by the way. But I digress.
Since one of the reasons for implementing this fee to replace the tax is to make up for lost revenue from hybrid/electric/alternative-fuel vehicle owners, an across-the-board, flat-rate fee will raise the cost of operating these vehicles. Do you think the busybodies in Congress and the EPA are going to let that happen?
This is contrary to what many politicians and bureaucrats believe to be good policy. Consequently, it’s highly unlikely to be as simple as they would like us to believe it will.
Even though the current phase of the NDOT study specifically avoids studying variable rates, there will inevitably be some effort to use this fee to encourage certain activities and discourage others. The do-gooders among us will certainly attempt to manipulate the rates to encourage the use of lighter vehicles that use less fossil fuels, avoiding driving during peak travel periods and driving on heavily-traveled routes.
So how do we distinguish between driving habits that are to be encouraged and those that are to be discouraged? How do we differentiate between people who drive the proper vehicles at the proper times in the proper places from those who don’t? How do we know what to charge to whom?
Well, in order to do that, we have to collect information about what people drive, when they drive and where they drive. Which brings us right back to…
Privacy Concerns. In a world in which the politicians and bureaucrats assert the right to tell us what kind of light bulb we can put in our bedroom people are rightfully skeptical that those same politicians and bureaucrats won’t take steps, in pursuit of the same goal, to monitor what, where and when individuals operate their motor vehicles.
No matter what they do, no matter how honorable their intentions, no matter how much they reiterate and stress their respect for people’s privacy, there’s no way to avoid the reality of the world we live in.
The reality is there are legitimate concerns and many significant problems with this plan. Nevadans are right to be skeptical.
(Michael Chamberlain is Executive Director of Nevada Business Coaltion.)