If Every Driver Paid a Toll, What Would That Mean for Billboards?

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If America switched from taxing gas to taxing miles driven, would that change help or hurt billboards?

Overall miles driven would not change much, unless taxes go way up.  But, who is in the vehicle could be different.

Why is this question even mildly relevant? Because:

  • The gas tax doesn’t work
  • Congestion is a political headache and dings the economy
  • Roads and bridges are falling apart
  • Congress doesn’t want to raise gas taxes, so lawmakers are looking for other ways to pay for transportation

Converting from the gas tax to taxing miles driven seems unlikely in the near term.  It faces political hurdles, and ignites heated debate about privacy and fairness.  However, a conservative Republican congressman from the heartland who wants to be the next chairman of the House transportation committee supports per-mile taxation.

Rep. Sam Graves (R-MO) says transportation should be “user funded,” and per-mile taxation is the fairest method.

Reps. Sam Graves, left, and Bill Shuster (R-PA), right, the current chairman of the House transportation committee

The federal gas tax is 18.4 cents a gallon, a rate set in 1993 and not indexed for inflation.  Since then, engines are more efficient and more vehicles are hybrid or electric.  UPS has ordered hundreds of electric delivery trucks.

State and local taxes/fees add 31 cents a gallon (2017 average).  State tax rates vary widely.

Several states have experimented with taxing miles driven (known as Vehicles Miles Traveled, or VMT tax); the technology exists to track and tax mileage.

Congressman Graves thinks commercial vehicles could quickly convert to VMT taxation because they already log miles driven.

If government switched to a per-mile tax that raised about the same amount of money as a gas tax, the total miles driven would likely stay the same, says economist Ashley Langer of University of Arizona.

However, the policy and political goal of switching from the outmoded gas tax to a per-mile method would be to raise MORE money for transportation, or MUCH MORE in order to pay for back-logged maintenance and construction.

If motorists pay significantly higher taxes, they would drive less.

“From the perspective of outdoor advertising,” says Professor Langer, “WHO is driving would change.”

A VMT tax would depress miles driven by people who drive fuel-efficient vehicles, because their effective tax rate would increase.  This cohort of drivers tends to be urban.

“This would be offset by a relative increase in the miles driven by people in fuel in-efficient vehicles, so you would have more advertising views by people in trucks and SUVs with a VMT tax compared to a gas tax,” says Langer.

Langer is co-author of a treatise on transportation taxes published in the Journal of Public Economics (2017), along with experts from University of Houston and the Brookings Institution.

State-sponsored research on per-mile taxation shows the promise and the problems of this approach.

“Is Texas Ready for Mileage Fees?” asked a 2011 report from the Texas Department of Transportation. No, not then.

One of the impediments:  strong distrust of government.

The know-how to implement per-mile taxation has been available for years, according to multi-state research launched by University of Iowa in 2005 and an Oregon test pilot in 2006.  Gizmos in cars can track mileage; billing could work like the multi-state EZ-Pass tolling system.

By 2013, Oregon figured out that charging $0.156 per mile would generate 28 percent more than the state gas tax.

Per-mile tax rates could be adjusted up or down to achieve broader goals such as reducing congestion (charge more) or subsidizing longer trips in sparsely populated areas (charge less).

The Big Brother aspect of tracking mileage seems Orwellian to many.  However, privacy concerns decreased during a four-month pilot test in Colorado.

Perceptions about fairness (equity) also could hinder acceptance of VMT taxes.  Is it fair to increase the cost of driving to owners of electric vehicles or hybrids who choose to reduce fuel consumption?  The flip side:  those drivers pay no gas tax or less tax.

What about motorists who drive longer trips, in the West and rural areas?  “They’re already driving farther so they already have to pay more tax than somebody who is driving, you know, two miles across town,” says pro-VMT tax Congressman Graves.

Professor Langer goes further: “Not only do drivers in the Mountain West and rural areas drive longer distances, but they often drive less efficient vehicles.  Their taxes per miles could actually decrease with a VMT tax, assuming that it raises an amount similar to the current gas tax.”

For all the political nervousness about the gas tax – and raising it – many drivers are fuzzy about what they’re paying.

When told how much they’re paying in gas tax, nearly half said it was more than they thought they were paying, according to a 2016 Colorado survey.

One in ten were not aware they were paying a gas tax.


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