Friday, February 20, 2009

Sacrificing Liberty for Roads

As a follow-up to my last post about roads and transportation matters, I wish to note that the AP has reported that Transportation Secretary Ray LaHood wants to get more revenue to finance federal transportation infrastructure.

Although the article mentions enhancing revenues through “other funding options” such as “more tolls for highways and bridges and more government partnerships with business to finance transportation projects,” the main focus of the report is a push to charge taxes per mile driven rather than the current flat 18.4-cent per gallon gas tax. (You also pay state gas taxes per gallon: 24.5 cents in Utah.)

LaHood says that “everyone” agrees that the current “highway trust fund is an antiquated system for funding our highways.” What he means by that is that people have been buying less gas per mile driven due to more fuel efficient vehicles. When they buy less gas, they pay less gas tax. This means that government gets less revenue for roads without reducing the need to build and maintain them.

While a tax calculated on miles driven would resolve funding reductions caused by fuel efficiency, it would not solve the chief problems that led to the last year’s $8 billion shortfall. The current economic downturn has reduced actual miles driven per vehicle. Last year’s skyrocketing gas prices also reduced miles driven. So, even if we had LaHood’s tax-per-mile plan in place, it would not have made much difference in current funding.

Although the article doesn’t make it very clear, LaHood is trying to address a long-term trend rather than short-term fluctuations. While it is important that our highway funding mechanism be kept up to date with cultural and technological changes, it is also essential to consider the economic and moral costs of implementing a plan such as the one suggested by LaHood.

To charge taxes per mile driven, the government would have to know how many miles each vehicle had traveled. Assuming this could be effectively accomplished without unduly infringing on personal liberty, (a fairly broad assumption,) there would need to be an efficient tax collection methodology.

The AP writer says:
“The system would require all cars and trucks be equipped with global satellite positioning technology, a transponder, a clock and other equipment to record how many miles a vehicle was driven, whether it was driven on highways or secondary roads, and even whether it was driven during peak traffic periods or off-peak hours.

“The device would tally how much tax motorists owed depending upon their road use. Motorists would pay the amount owed when it was downloaded, probably at gas stations at first, but an alternative eventually would be needed.”
Does this sound a little Big Brother-ish to you? Not to worry. The AP reports:
“Privacy concerns are based more on perception than any actual risk …. The satellite information would be beamed one way to the car and driving information would be contained within the device on the car, with the amount of the tax due the only information that's downloaded, he said.”
Of course, gas pumps would need a way to read the data on that device. Moral hazards aside, implementing these devices on vehicles and gas pumps would not be without cost to the taxpaying consumer. Like most politicians and bureaucrats, however, LaHood seems to be blithely unconcerned about (or unaware of) these hidden taxes that would be levied directly or indirectly on everyone (since we all directly or indirectly use the highways).

The moment you install regulatory devices on automobiles — especially ones that calculate tax — people will start finding ways to subvert the devices. Then we will need to implement a corresponding policing function, thus, raising costs even more. This is a wicked spiral that will lead to restrictions on the liberty of each person.
(A low-tech workaround would be to fill up gas containers like the ones you use for filling your lawnmower, and then dump the gas into the vehicle off site. Government would then need to create restrictions on this kind of activity. Gas station attendants would be forced to become law enforcers.)
Might there not be an upside to all of this? Sure. But only if more government intrusion is welcomed. If the devices were not simply one-way devices, the ability of emergency responders to get to the scene of a crash would be enhanced. So would the ability of law enforcers to track down stolen cars and fugitives. We would first need to address the question of whether these benefits would be worth the moral hazards involved.

We have a system of federal highways that are essential to our nation’s economy and wellbeing. This kind of infrastructure does not come free of charge. Those of us that benefit from these roads — that would be all of us — have a responsibility to ante up our share for their development and maintenance. But it is essential that in devising systems to accomplish this objective, the higher goal of individual liberty be carefully guarded and maximized.

Our current gas tax system may be “antiquated.” Indeed, it may fail to adequately capture sufficient revenue to meet funding requirements. But at least it minimizes government intrusion. Businesses are tasked with collecting the federal tax on each gallon of fuel sold. The tax is collected while the taxpayers and their activities remain largely anonymous to the government.

While contemplating ways to address the long-term trend of declining revenues, let’s not throw away the best features of our current system. Let’s put liberty first on the docket instead of passing it off in some mumbling afterthought.

UPDATE: The Obama administration has nixed LaHood’s per-mile transportation tax idea, at least for now. Apparently some in Congress still want to pursue the idea, and a number of states are thinking about it as well.


Anonymous said...

I have no problem with the idea of taxing per mile driven. Road wear is more closely aligned with miles driven than gallons used. I don't like the idea proposed by Sec. LaHood though. It seems to me that we don't need to know which miles were driven. Every time someone goes in to have their vehicle services their mileage gets recorded proving that acquiring the data in a non-intrusive way should be simple enough. Collection could be solved by reporting mileage when registering vehicles annually and then collecting the tax at that time. To discourage people from driving unregistered vehicles they could raise the fine for that offense by at least the average tax amount of the mileage tax.

I'm not suggesting this as a cure-all for transportation infrastructure funding shortfalls (your last post made it clear that there is no single solution) but we do not need to rule out this option - it can be done without an invasion of privacy.

Scott Hinrichs said...

I agree that a per-mileage method should not be ruled out. What should be ruled out is government tracking of personal behaviors.

Jake said...

As for tracking the # of miles driven, why would it have to be that high tech? What is wrong with just having your mileage on your odometer written down when you register your vehicle? The biggest change might come in now requiring a state inspection (and odometer reading) yearly instead of every-other-year or less often.

Sure, some people may try and circumnavigate the issue by rolling back their odometer, but isn't that already illegal? I don't see why we would need all the gadgetry such as onboard GPS devices and monitoring stations to download real-time data, when a simple visual inspection each year would suffice.

Scott Hinrichs said...

Low-tech approaches might be the way to go. On the other hand, politicians fear the result.

Right now we pay incrementally, each time we fill up at the pump. It is seamless an ubiquitous. No one asks how much money you make or who you are. No one complains that they can't afford it.

Imagine the difference when people have to pay in one lump sum. Politicians know that this would engender a whole new level of taxpayer anger. They also know that the progressives will come out of the woodwork, arguing for special rates for those perceived as disadvantaged. Many will whine that they don't have enough money to pay the lump sum. They will want to pay incrementally, much as many currently pay their property taxes.

There may be good workarounds for these kinds of issues, but they are the kinds of things that must be addressed when thinking about a per-mile taxation plan.

Eric B said...

That demonstrates the regressive nature of a gas tax--and it will just get worse. Plug-in hybrids will not be cheap. Neither will the installation cost for the transponder. No easy answers.

y-intercept said...

I think a per mile model would be wonderful.

The per mile option would also work quite well with insurance.

Rather than going through Big Government, one might be able to work something out through the insurance system or trhough trusted third parties.

The individual driver would benefit greatly by having a detailed account of their driving. The ideal system would be one that centered on the individual needs and did aggregate reporting to insurance and government.

Scott Hinrichs said...

If this can be done without the Big Brother effect and without imposing a greater burden on the taxpayer, it would be a good thing. But it would require some careful thinking to avoid the pitfalls inherent in such a plan.

Scott Hinrichs said...

A trusted third-party system might be useful. The problem with Jake's low-tech suggestion is that, unlike Utah, many states do not actually have a regular inspection function.

Before you freak out about that, studies have repeatedly found that annual (or bi-annual) inspections do not actually improve vehicle safety at all. They function more as an government-required revenue stream for businesses that do inspections.

Many states simply have laws on the books that require vehicles to always be up to snuff on inspection criteria. If a cop pulls you over and your car appears to not meet criteria, you are given a ticket that will be waived if you can get a certified inspector to pass your vehicle.

So, the regular mileage collection methodology available in Utah is not generally applicable. The costs of implementing a system of individual reporting as opposed to businesses collecting the tax as a portion of sales volume must be carefully considered.