I’ve been very surprised by the reactions of friends to the state transportation department’s exploration of a road-use tax to replace the current gasoline tax used to maintain and improve our roadways. You can find more about the proposal here.
Instead of paying a fixed amount of tax on each gallon of gas that you buy, we would be assessed a fee based on the number of miles that we drive.
The proposal comes from the hard fact that with the advent of improved gas mileage of vehicles of all kinds, along with the appearance of hybrid or all-electric cars, gas tax revenues have stagnated or fallen.
And that means that the money necessary to fund our roads and highways is in short supply and will become even more of a problem in the future.
Theoretically, if we come close to achieving the state’s transition away from fossil fuels, most gasoline-powered cars will be phased out, and gas tax revenues will disappear with them. Under those admittedly extreme circumstances, our need for roads is unlikely to disappear, and so new means of reliable funding will be required.
This isn’t a Hawaii problem. It’s a national problem being confronted by all states and communities.
But I’ve watched as too many people blast the idea of a road-use tax as just another scheme to dig into our wallets, an opinion offered with the same vehemence as their complaints about the potholes and generally poor condition of so many of our roads.
The state says: “In general and looking at an overall average, under RUC, everyone would pay the approximately same amount per mile driven as the average driver pays today in gas tax.”
The average driver racks up 12,000 miles a year. When we lived in Kaaawa and commuted into Honolulu, our average was about 18,000 miles annually, perhaps a little more.
Under the current system, federal, state, and county fuel taxes go into their respective road maintenance and construction funds.
The state readily acknowledges there are alternatives to the proposed road-use fee.
Yes, there are other options to fund road maintenance, including an increase in vehicle registration and weight fees, increasing the gas tax, increasing sales taxes, or diverting state money from other publicly funded programs. Some states use toll collections on the highways.
Each of these alternatives, like the current and proposed new system, lead to winners and losers.
Take the current system of gasoline taxes. Who pays the most in gas taxes? Those with older and less fuel efficient vehicles, larger vehicles like trucks, and those who live farther from where they regularly work or shop, and who don’t have convenient access to good public transportation.
Those who pay less under the gas tax system include all who can afford newer vehicles that get better mileage, as well as those who live closer to where they work and shop, or have easy access to public transportation. And those with electric cars, of course, enjoy use the roads without paying any gas tax.
So think about the proposed road-use tax system. Remember that switching to a road-use tax would potentially eliminate state and county gas tax, which would result in an immediate and significant drop in gas prices.
So who would benefit the most under the new system? Obviously, this includes those who drive the least. Senior citizens who don’t commute daily to work. Others who live and work in the same neighborhoods. Those with longer commutes but driving cars with excellent mileage might also benefit from lower gas prices.
Everyone else, it seems, would be taxed proportionally on the number of miles they drive. Those with electric, hybrid, or very fuel efficient cars would end up paying more than they do now, I expect.
Hmmmm. The public would lose something in the process, and that is the ability to incentivize the transition away from fossil fuels. High gas prices have played a key role in encouraging the shift to more fuel efficient cars and, in the process, lessened our carbon footprint. It’s simple economics. When gas prices rise, more people think about replacing their gas guzzlers. When prices fall, trucks and large SUVs again seem to become the vehicles of choice, as has happened again the past few years.
It does seem to me that the system needs to retain some rewards for those who use less gas.
Another thing seems clear to me. There should be a base fee for the right to access the roads whenever we choose, irrespective of how much we actually drive. Everyone should pay some minimum. Just the way that Hawaiian Electric has a base fee for accessing the grid, irrespective of actual electrical use.
Then we have to account for benefits that those who live “in town” and close to everything. They benefit from long term planning and zoning that have encouraged new and more affordable communities farther from the heart of Honolulu, leaving our central core with lower densities and more open space that might otherwise be possible if the sprawling planned communities of leeward Oahu hadn’t been built.
So in addition to a that minimum fee that all drivers might pay, there should be some additional amount that those of us in town would pay, sort of a “not in my back yard” fee, if you get what I mean. This would reduce, although not eliminate, the higher costs associated with longer commutes.
It’s a complicated set of trade offs.
I’m interested in what others are thinking. Would love to hear other constructive perspectives.
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A proportional road use tax makes whole bunches of sense to me.
A good rundown of what’s at stake. Remember that tax based on mileage was a long ago proposal, nixed because the lesser well off travel longer distances (housing cheaper out of the city, generally).
Ive not any bright ideas but note here that potholes seem to be epidemic on our main island, Oahu over at least the BI and Maui. Why’s dat?
A vehicle-miles-traveled tax makes sense to me, as long as it replaces the gas tax and doesn’t require providing the government more information about our travel habits than we already do.
As far as a “right to access the roads,” that could be considered covered in vehicle registration fees.
Thanks for this Ian. First, the major point is the gas tax is a regressive tax, and its replacement, a Carbon tax, is worse. The reason is the less well of drive older cars that are less fuel efficient. There choice has been a hybrid at $7,000 plus to buy, or an all electric, like the leaf, which appears somewhat inexpensive but requires a driveway, or at least home ownership to buy. In addition to the price, the $7,000 extra is not recovered by gas savings even with our high gas prices. Furthermore, its well documented that when prices fall people switch to premium. Lastly we burn more oil producing electricity than we do for vehicles. That said, high gas prices, not necessarily the tax on them, leads to switches. Second, hybrids weigh more. Thus they create more problems for road maintenance. Which leads to potholes. On oahu, every pothole repair creates congestion lots of it. This can partly, be done at night, but it means shutting down longer stretches of road, and repairing them all at once. One of the reasons that Oahu has more of a problem with potholes. So I kind of lean towards a different road use tax, And it can lead to continued savings. The incentive would then be to switch to rail, which is a big fuel saver, lessens the pressure on roads, etc. If its ever finished? By the way, another statistic, total vehicle registrations, like housing, has far outpaced population growth. We have way more cars carrying fewer people.
Thanks for this Ian. First, the major point is the gas tax is a regressive tax, and its replacement, a carbon tax, is worse. The reason is the less well off drive older cars that are less fuel efficient. Their choice has been a hybrid at $7,000 plus to buy, or an all electric, like the leaf, which appears somewhat inexpensive but requires a driveway, or at least home ownership to own. In addition to the price, the $7,000 extra is not recovered by gas savings even with our high gas prices. Furthermore, its well documented that when prices fall people switch to premium, not just gas guzzlers. Lastly we burn more oil producing electricity than we do for vehicles. That said, high gas prices, not necessarily the tax on them, leads to switches. Second, hybrids weigh more. Thus they create more problems for road maintenance. Which leads to potholes. On oahu, every pothole repair creates congestion, lots of it. This can partly, be done at night, but it means shutting down longer stretches of road, and repairing them all at once. One of the reasons that Oahu has more of a problem with potholes. So I kind of lean towards a different road use tax, And it can lead to continued savings. The incentive would then be to switch to rail, which is a big fuel saver, lessens the pressure on roads, etc. If it is ever finished? By the way, another statistic, total vehicle registrations, like housing, has far outpaced population growth. We have way more cars carrying fewer people.
The Road Use Tax is an excellent way to insure we have roads we can use. But, what about the UBER’S flying cars? Will they pay nothing?
The main justification for the proposed road use tax is that people who drive fuel-efficient or electric cars are not “paying their fair share”. What is a fair fee for using the roads? It seems to me it should be based on road wear caused by each vehicle, which depends on the vehicle weight. The American Association of State Highway and Transportation Officials (AASHTO, which includes members from Hawaii DOT) has studied this, and found that road wear is proportional to the axle load (vehicle weight divided by number of axles) raised to the fourth power. That means that a vehicle that weighs twice as much causes 16 times as much damage to the road, and therefore should pay 16 times the fee. A big truck could have an axle load ten times larger than a passenger car, which means it causes 10,000 times as much damage to the road.
A fuel tax and a mileage tax are not mutually exclusive. They can both coexist and achieve what each is good at achieving if they are both modest in cost.
As a rule of thumb, it seems to me that the more types of tax there are, the better it is — as long as the overall rate of tax is moderate. So every state should have an income tax, but it should be modest.
The “yellow vest” protests in Paris reveal the need to take into account the needs of the workers living just outside the city who commute to work in their cars. We need to be careful burdening these people with more gasoline or road taxes. That being said, it was pointed out that the yellow vest people live outside the city because although they work in the city, their hearts are in the countryside. They want to live in a house far from the madding crowd, they don’t want to live in apartments or use mass transit even though this is heavily subsidized in France. But at least the French drive smallish cars, while their American counterparts drive big trucks (four doors, with the tiny bed in back), and the Americans live in big houses. An American “working class” family with only high school diplomas can earn a combined income of six digits, but even then they sometimes have no savings because they live large. So while it is true that these people live far from the city because it is the only place they can afford to live, more accurately it is the only place they can afford to live a certain kind of LIFESTYLE that they insist upon living.