Boxer: Collect Fees on Driving Through ‘Honor System’

Another must-read from last week’s Reuters Infrastructure Summit: Barbara Boxer, the California Democrat who will be responsible for shepherding the next transportation bill through the Senate, says she’s open to a mileage tax and to indexing the gas tax to inflation to generate new revenue.

It’s great to hear a legislator in Boxer’s position voice support for an inflation-adjusted gas tax. Someone filling up, say, a 10-gallon tank contributes the same amount in gas taxes today as in 1993, when everyone was paying $1.20 per gallon at the pump. Too bad that unmooring the gas tax from its peg seems anathema to team Obama.

It’s also unfortunate that, when it comes to the mileage tax, Boxer’s support doesn’t appear to run very deep:

The bill’s authors, though, have rejected attaching a small device to cars to measure Vehicle Miles Traveled, Boxer said.

"We’re looking at options. Are there ways for people to — an honor
system, when they register their vehicles — just say, ‘This is the
miles I had last year, this is the miles I have this year,’?" she said.

Many, including Rep. James Oberstar, the Minnesota Democrat who will
manage the transportation bill in the U.S. House of Representatives,
have suggested attaching a machine smaller than a typical cell phone to
vehicles to record mileage.

An honor system… Maybe that works for roadside fruit stands, but funding a desperately needed overhaul of America’s transportation network? I wouldn’t bank on tamper-proof odometers.

  • She’s just gasbagging. She knows that “honor system” eventually becomes “enforced law”, as it always has in the past.

  • Deacon

    The honor system is a novel Idea, nothing more. Trying to police it will be neigh on impossible. Very few people will let you tag their car with some little instrument to track how much they drive, I see outrage at the idea. Personally tag away I don’t care. I get pegging the tax of gas to inflation. It should have been done a while ago.

  • Rather than pegging the gas tax to inflation, we should make it a percent of the price of gas (like the sales tax).

    Over the next couple of decades, gas prices are going to go up much faster than inflation, because of increasing world demand and limited supply. When prices go up, we will need the extra revenue to build more public transportation and reduce auto-dependency.

  • It’s unwise to peg it to the price of gas as that will add incentives to wrong-headed initiatives like offshore drilling in the gulf of mexico, ethanol blends, etc. As politically unpalatable as it might sound the only way to truly penalize drivers is to tax based on distance driven.

  • Whose policy is it to penalize drivers? I only want to reduce fuel combustion and reduce driving, best supported by gas/carbon taxes and congestion/milage pricing respectively. We must do both.

    A plain, percentage-based sales tax on gasoline (which is anything but controversial for other goods) does not increase pressure to drill. The companies that decide whether to extract oil at ever higher costs have less and less incentive to do so as the tax decreases demand (at whatever pre-tax price) and lowers their potential revenues. If we start with a low percentage tax and gradually increase it to a significant number, we can predictably keep oil in the ground that would otherwise be extracted and combusted. Those that insist on driving regardless will do it more efficiently (smaller, less powerful vehicles, electrics) to lessen their newly internalized costs of burning carbon. A mileage tax is great too, to reduce congestion and sprawl, but it doesn’t directly address fuel combustion, a problem whose low-hanging fruit are evident when you compare vehicles in the US to those in countries with significant gas taxes.

  • You’re right about “penalize”, I misspoke. I meant to say “disincentivize distance driving of petroleum vehicles”. In this scheme, a hybrid should get some sort of credit, and a fuel-cell vehicle should be effectively free.

    While it’s true that a significant sales tax would decrease overall petroleum consumption (as it has in the EU, Japan, and so forth) the political barriers to implementation in the US are all but insurmountable. If the federal government increased the gas tax by 10-15%, Americans are still likely to reap significant benefit when external factors drive down the aggregate cost of oil (decreased Chinese consumption, a drop in the value of the USD, etc). If you look at the flux in the price of oil (and the value of the USD) over the last year it’s clear that this will remain possible if not likely for the foreseeable future.

    My point is this: by adding a distance component to a petroleum tax the government can maintain better continuity of disincentives for the average American driver during periods of commodity/currency volatility.

    And as to keeping the oil in the ground … while I appreciate your optimism, if we slowly flatten out our consumption it’s pretty likely that East Asia + India will shift to become the growth markets for petroleum. And yes they are also advancing reduced emissions policies but in aggregate their usage of jet fuel, fuel oil, etc are likely to continue increasing for a while.

  • “the political barriers to implementation in the US are all but insurmountable”

    It’s a fine line that mileage tax advocates have scrawled between insurmountable and unpalatable. Given the changes working their way through America, who knows what Americans will be amenable to in a few years? The different kinds of pricing address different problems; it does us no good to malign one and pretend the other can fix everything. Why use the blunt, corruptible instrument of mileage-tax exemptions when gas taxes solve the vehicle efficiency problem handily?

    “better continuity of disincentives for the average American driver ”

    The interesting thing is that people didn’t take back to the road in droves when gas came back down. Among other reasons, they finally accepted that the price of this finite resource could only go up, and that has thrown cold water all over petroleum culture. So I’m not sure that continuity is such a problem, as long as the calculus of future taxes and limited resources is absorbed by the public.

    On the other hand I’m willing to reconsider gas/carbon tax as a sale tax, simply because the externalities are not dependent on the sale price that I can see. Well, there is the whole war-waging externality when hostile countries are enriched by high oil prices. But yeah, I guess I’d be open to a new, much higher rate by-volume indexed to inflation. It just seems a little more complex than necessary, and that the amount will always feel ‘off’ after a drastic swing in the base price.

    “if we slowly flatten out our consumption it’s pretty likely that East Asia + India will shift to become the growth markets for petroleum”

    Okay, but that is a problem for all of our schemes, separately or in combination. (We’re doomed.) But right now WE are the biggest problem, and have been for a while. It’s a shame we didn’t do something about this sooner, but better late than never. India I think will not be able to maintain its petroleum subsidies through the next price spike, at least not if enough of their people buy cheap cars to take advantage. In the end we may have to rely on natural forces; certainly some combustible fuels will remain in the ground, either because we killed ourselves off or they became too expensive to extract. The question is, how much will be left there? Taking the world’s biggest oil consumer off the market would have a huge effect on that. And carbon taxes, unlike mileage taxes, at least have the potential to be internationally applied. Nothing should be off the table.

  • I sympathize with your outlook regarding the many changes coursing through the country but am skeptical that Americans will generally accept higher taxes without a fight. Even as we enter into a period of relative liberalism the anti-tax hangover from the Reagan era will have a long half-life to burn through.

    Not intending to malign a direct petroleum tax. I simply think it would be most effective as one component of a larger petroleum tax, with another based on mileage/mpg. By combining the two the government could tax all drivers but specifically target distance-driving. This would drive up ridership on bus/rail/air and create the right disincentives for urban sprawl.

    My impression is that consumers are driving less due to reduced incomes have from the financial crisis, but that this hasn’t corresponded with an increase in sales of fuel-efficient vehicles. (see http://www.usatoday.com/money/autos/2009-02-05-hybrid-sales-down_N.htm) The notoriously short-term memory of the American public does not bode well for any energy-based tax scheme. Much as I’d like it to be otherwise, it seems a bit premature to say that cold water has been thrown on the petroleum culture.

    What do you think about the idea of a prescribed gas price from the government, irrespective of underlying fuel prices? Say it would be fixed at $4.50 and rebalanced yearly. Friedman et al are advocating this.

    Your proposal for international carbon taxes seems unworkable. I’m not aware of any “international” taxes today; the governance of this seems hideously difficult to propose/manage.

    Great comments btw!!

  • “am skeptical that Americans will generally accept higher taxes without a fight”

    Whether it’s mileage based, carbon based, or both, there will be a fight. Revenue neutrality might be the answer but that doesn’t help fund transit, or falling down bridges for that matter. In this case, also, I support whichever strategy someone wants to stick their neck out for. I’m hoping a new generation of both conservative and liberal politicians will have the courage stand up for externality-charging, which aligns with principles across the spectrum.

    “I simply think it would be most effective as one component of a larger petroleum tax, with another based on mileage/mpg.”

    I simply agree!

    “What do you think about the idea of a prescribed gas price from the government…”

    Instinctive revulsion, but I’ll try to keep an open mind if I come across a piece advocating it. 🙂

    “Your proposal for international carbon taxes seems unworkable”

    Not my proposal, I just googled “international carbon tax” some time ago and found that it had been proposed. It’s unwieldy and we aren’t ready for it, but unless a renewable source is developed that is naturally cheaper than combustible fuels, we have to do something to raise the cost of combustion. Governments don’t have much reason to be against a carbon tax that gives them revenue, especially if a trade organization authorizes a tarif on imports that don’t have a conforming carbon tax already incorporated in to the price. At that point holdouts can choose between collecting the carbon tax themselves or letting the foreign government have it. And most of the countries we would worry about dragging their feet aren’t exactly models of democracy; they may as well just impose the tax. It’s more complicated than this, obviously, but if we can win the fight in the US (ground zero for the problem itself) we’ll be well on our way to a global solution.

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