Doubts About a Vehicle-Miles Traveled Tax

Apparently Ray LaHood says he wants to look at replacing the gasoline tax with a vehicle-miles traveled tax. Ezra Klein observes that part of the appeal here is that VMT has much less short-term variance than the price of gasoline, so you get a more stable tax base:


This is true enough. But I think the broader logic of a VMT tax is off-base. With a gasoline tax, you generate some revenue. And you also reduce the quantity of gasoline burned, which has benefits for air quality and climate security. With a congestion charge, you generate some revenue. And you also reduce the occurrence of traffic jams and ensure that your traffic flow is allocated more efficiently. In other words, both are methods of generating revenue that would have substantial social benefits even if the accrued funds were lit on fire rather than spent on useful projects. A VMT tax just discouraging driving as such. Which sort of captures some of the social benefits of a gas tax and congestion charges, but pretty indirectly and inefficiently. So I’m not sold. When it comes to pricing driving-related activities, it makes sense to charge people from things that actually impose costs on others—burning gasoline, and taking up space on crowded roads—not the mere act of driving.

A guy who drives an SUV along a 25-mile stretch of the Beltway at peak morning rush hour is imposing a lot more negative externalities on his fellow citizens than is a guy driving a Prius 50 miles in the middle of the night on the outskirts of Albuquerque.