Lawmakers in several states are applying for federal government grants, sponsored by the Federal Highway Administration, to fund programs to study the viability of implementing mileage-based user fees (MBUFs) to fund government road construction, to reduce reliance on state or national revenue from excise taxes on fuel purchases.
Government transportation agency officials from four states, including Connecticut and Delaware, applied for federal grants in July to fund pilot programs to test implementation of MBUF-based systems.
Motor-fuel taxes tax the volume of fuel purchased by an individual before driving on government roads, but MBUFs directly tie a driver’s tax liability to that individual’s use of government roads.
Theory vs. Practice
Joseph Schwieterman, a professor of public service and director of DePaul University’s Chaddick Institute for Metropolitan Development, says the use of MBUFs could increase taxation by reducing transparency.
“In theory, per-mile fees look good, but the difficult part is that state governments possess considerable monopoly power when it comes to pricing roads,” Schwieterman said. “No doubt, the public is apprehensive that states will exercise this pricing power to extract more revenue than is necessary simply to maintain the system.”
Schwieterman says politics may pose a barrier to fairness in using user fees to fund government road construction.
“In an ideal world, fees would closely reflect the full, allocated cost of maintaining the highways and achieving congestion relief, as well as in certain cases, expanding the road system,” Schwieterman said. “Achieving that in today’s turbocharged political environment, though, could be difficult.”
Some Have Privacy Concerns
David Stevensen, a research fellow at the Cesar Rodney Institute, says the systems are likely to create big privacy problems and encourage abuse by local governments.
“The privacy issue is huge,” Stevensen said. “Do we really want the government to know where we are all the time? This system is open to abuse. For example, red-light cameras were introduced as a safety feature, but the City of Wilmington now has them everywhere and uses the fines as a major revenue source. What would stop them from mailing speeding tickets based on the [Global Positioning System]?”
Stevensen says mileage-based user fees are not as fair as gas taxes.
“People may keep older cars longer or find other ways to trick the system,” Stevensen said. “The gasoline tax is in place, and [it’s] very simple. It is also more transparent, as you can see the rate on the pump.”