One More Time… The Beauty of the VMT Tax

George Hoffer

by James A. Bacon

As the General Assembly weighs the merits of Governor Bob McDonnell’s tax plan, which would force non-drivers to subsidize drivers through the sales tax, it is useful to remind ourselves what the diametrically opposite tax regime, a Vehicle Miles Traveled (VMT) tax, might look like. Two years ago, transportation economist George E. Hoffer laid out a plan for a VMT tax in The Virginia Newsletter.

Hoffer proposed a two-tiered tax. There would be a fixed component, which would pro-rate the annual vehicle registration fee and applicable titling taxes. Plus there would be a 1.1 cent per mile fee for traveling on public roads. That fee could be adjusted up or down by region, type of road surface (gravel, paved), weight (trucks pay more) and even congestion. Motorists would receive a monthly itemized bill similar to their electric bill.

The system would be based on GPS technology, which would track each vehicle’s precise movements. Hoffer dismisses the privacy concerns on the grounds that smart phones and on-board technologies already can, and often do, track peoples’ movements without anyone caring. (I would add that the use of government-collected data would be more strictly regulated through legislation than the technology in use today.)

Hoffer does foresee one big transitional issue — the inability to tax out-of-state drivers. That’s why he favors maintaining a nominal gasoline tax. A low tax would encourage out-of-state drivers to over-purchase gas while driving in Virginia, generating some income from them. (Just asking: Why can’t we simply maintain the gas tax while exempting cars that pay the VMT from paying gas at the pump?) In the longer term, Virginia would work out reciprocal arrangements with other states that adopt the VMT approach.

One beauty of the system is its flexibility. The per-mile charge could be adjusted from region to region, depending upon the volume of traffic, congestion and condition of the roads. Thus, Virginians might pay 1.5 cents per mile when driving in Northern Virginia but only 1 cent per mile when driving in Southside. (There would have to be measures to ensure that money raised within a particular region stayed within that region.) That flexibility could address the concerns of rural Virginians and their General Assembly representatives who are concerned that they would overpay because of their greater travel distances. As Hoffer says, “A GPS-based VMT would discriminate between rural uncongested and urban congested travel, as well as road surface type.”

He also points to some ancillary benefits of the technology such as the ability to immobilize uninsured vehicles, stolen vehicles, and vehicles under police pursuit.

Another beauty of the VMT tax is that it allows people to adjust their behavior in socially beneficial ways — by driving less. Just as homeowners confronted with their electric bill might choose to insulate their attics or lower the temperature, car owners might find ways to drive less — whether to walk or bike, take transit, carpool or telecommute, or even, when selecting where to live, to choose a location with superior transportation options. There would be no social engineering. People would be free to live their lives the way they see fit without imposing the cost burden of their choices upon others.

6 Responses to One More Time… The Beauty of the VMT Tax

  1. This idea was well covered by Jesus in his Sermon on the Mount.

    “Do not give what is holy to the dogs; nor cast your pearls before swine, lest they trample them under their feet, and turn and tear you in pieces.”

    Asking the Virginia General Assembly to consider a GPS based VMT with variable location based pricing is definitely casting pearls before swine.

    Seriously, this is a General Assembly that doesn’t believe in inflation.

  2. from a “user” point of view – having an indexed gas tax pay for maintenance and operations – would fly politically.

    Where the problems come if what taxes you want on top of that for new projects and improvements.

    Then people want more transparency and accountability; they want to know what their increased taxes will build that will benefit them

    I just don’t think a VMT tax is going to work unless it is national in scope because you’re not taxing out of state and you ARE taxing Va drivers that go out of state unless you have a way to know when they cross over and back – and that sounds like a bigger problem to solve than even the use of transponders for open-road tolling where the tolling gantry already knows which way you are going because of the lane you are in.

    I think the method that is most likely to win – is the one that people will understand and accept as fair and equitable – and not intrusive.

    We all know the govt can track us if they want to and we already know there are abuses – like police putting GPS trackers on cars without court warrants… The idea that the police could essentially “track” you by logging in to a database is untenable.

    and don’t say there will be “protections” – because we know what happens if the data is collected… it WILL be accessed.

  3. Gas tax. VMT. Both mean the more you drive, the more you pay. Six to you, half a dozen to me. They are the same bloody thing except the mechanism to collect the gas tax is already in place and violates nobody’s privacy. The system he describes is too complicated.

  4. McDonnell’s “plan” is what happens when the GA spends 25 years denying inflation…

    RoVa don’t want no stinkin increase in gas taxes cuz they KNOW places like NoVa will slurp it all up and RoVa will get squat.

    They may be poor but they ain’t stoopid.

  5. And in many areas of RoVA, the transportation systems works just fine today. So why would they want to pay more at the gas pump? And let the State put a tracking device in their cars and trucks – over their dead bodies.

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