After the Gas Tax


Pat Garofalo writes about a second straight year of shortfalls in the Highway Trust Fund driven by reduced fuel consumption and therefore lower gasoline taxes:

In any case, in light of new CAFE standards and a growing emphasis on fuel efficient vehicles, raising the gas tax is not a permanent fix for the fund’s woes. Two congressionally mandated commissions have recommended that “Congress find a new revenue source to pay for highway and transit programs,” and “their top recommendation was to tax motorists based on how many miles they drive.”

I think it’s probably true that in the long run there’s a need to move beyond the gas tax as the main source of transportation funding, but for the short term it seems that the obvious policy solution would be (run and hide!) a higher gasoline tax. Taxes on gasoline are an eminently logical source of revenue. Gasoline consumption is associated with a lot of negative externalities. A so-called VMT—Vehicle Miles Traveled—charge doesn’t align incentives nearly as well. Now that said, an idea related to a VMT, congestion charges, could also raise a lot of funds in some areas.

But to me it all keeps coming down to the fact that driving, as such, is perfectly fine. Given that we have all these roads, people may as well drive on them. But burning gasoline creates a lot of solution. And driving on crowded roads at crowded times creates a lot of problems. Those are the things we should be charging for. And if the current gas tax rate doesn’t bring in enough revenue, we should raise the rate.