Florida Officials Propose High-Tech Driving Tax

Published November 1, 2009

Florida transportation officials, worried about the state gas tax bringing in too little revenue, have proposed a high-tech alternative: Tracking where motorists drive and charging them by the mile.

The vehicle miles traveled tax, or VMT, would replace the gas tax under a proposal by Noreann Downs, District 5 secretary for the Florida Department of Transportation in Central Florida.

At 42.7 cents per gallon, the Sunshine State has one of the nation’s highest gas taxes. Downs told the Orlando Sentinel in September it is not keeping up with Florida’s revenue needs, especially with the recession and high gas prices cutting into normal driving patterns.

Tracking Drivers

The only practical way to charge drivers by the miles they drive is to install a GPS tracker in every automobile, a move several states have contemplated. Oregon launched a pilot program earlier this year.

But forcing motorists to allow the government to track where they drive and how often has raised privacy concerns. George Pieler, a senior fellow with the Institute for Policy Innovation in Lewisville, Texas, said he thinks “the privacy issue is the killer here.”

“Civil libertarians already are outraged by red-light cameras, and this is several orders of magnitude more intrusive,” Pieler said. “One suspects there is also a quiet conspiracy with law enforcement personnel who would love to have this tracking info for their own purposes.”

Magic Kingdom Could Suffer

Thomas Perrin, public affairs director for the James Madison Institute in Tallahassee, Florida, notes any GPS tracking system for in-state drivers would exclude the millions of people who drive to Florida every year to visit the state’s beaches and world-famous resorts.

“Tourism plays a major role in Florida’s economy,” Perrin said. “Therefore, if a VMT tax were imposed in Florida and enforced using GPS devices, what would happen when tourists whose vehicles lack the GPS refuel? Would they be exempt from paying this tax, leaving Floridians to make up the difference?”

Pieler agrees a VMT does not seem compatible with Florida’s tourism industry.

“Do Disney World patrons want all their movements tracked? Or would they head to Anaheim [California and Disneyland] instead?” Pieler asked.

Punishing Fuel Efficiency

Perrin also says charging motorists by the mile doesn’t make sense when the federal government and automakers are trying to push consumers into more fuel-efficient vehicles.

“By taxing vehicles’ mileage and not their actual fuel consumption, a VMT tax undercuts the investments of those who have switched to more fuel-efficient cars, while reducing the financial incentives for individuals to purchase vehicles with higher MPG ratings,” Perrin said.

“A VMT tax is also regressive because lower-income individuals tend to have … less flexibility in their work commutes,” Perrin added.

Pieler says government encouragement for citizens to live “greener” lives is turning out to be full of contradictions, especially when it comes to automobile use.

“If we don’t tax by mile of highway use, we encourage more driving, which we don’t like,” Pieler said. “If we tax by mile of use, we discourage more-efficient vehicles, which was the whole rationale of the cash-for-clunkers program and the Obama administration’s new, higher fuel efficiency standards.

“In essence, greens want to penalize driving from two diametrically opposed directions,” Pieler added. “But it isn’t easy being green.”

Critic: Current Revenue Misspent

Pete Sepp, vice president for policy and communications at the National Taxpayers Union in Alexandria, Virginia, said Florida legislators and bureaucrats should find a way to spend transportation funds more efficiently, rather than reaching for more tax revenue.

“VMT taxes are just another way to reach deeper into motorists’ pockets instead of facing facts that existing transportation tax revenues aren’t being properly spent,” Sepp said.

“On the federal level alone, the U.S. Government Accountability Office reported that over the past five years some $78 billion of federal fuel tax revenues were diverted to transportation purposes other than repair, maintenance, and construction of roads—mass transit, bike paths, museums, etc.,” Sepp added. “The situation can be even worse at the state level, where gas taxes often go to everything from education to health care.”

Private-Sector Solution Suggested

Berin Szoka, director of the Center for Internet Freedom at the Progress and Freedom Foundation in Washington, DC, says it makes sense to charge drivers “user fees” according to how many miles they drive, which roads they drive on, and when.

“GPS technology makes that sort of smart pricing feasible today,” Szoka said. “This system would reduce traffic congestion by giving drivers an incentive not to drive at peak times, which in turn could significantly reduce air pollution.”

But, Szoka added, “We certainly don’t want the government to keep a dossier of who drives where and when.” The solution: Let private firms, not the government, collect the travel information.

Smart Pricing Advantages

“Smart pricing would ensure that road construction actually responds to consumer demands and would allow private road operators to compete for driving fees without the hassle of toll booths,” Szoka said.

“A truly competitive market for driving services would benefit everyone by driving down costs and creating strong incentives for private road operators to innovate in improving the safety of their roads,” Szoka added.

James G. Lakely ([email protected]) is co-director of The Heartland Institute’s Center on the Digital Economy and managing editor of InfoTech & Telecom News.