Rethinking Paradigms

Pay for Roads, Bridges with Per-Mile Fee

from CATO

NightLivingStatistsIn 1919, my home state of Oregon was the first to tax gasoline and dedicate the revenue to roads. Now Oregon is moving to become the first state to replace gas taxes with a per-mile fee.

Historically, gas taxes paid for most of our state highways, but there are four reasons why they no longer work. First, gas taxes don’t keep up with inflation. For example, the value of the dollar has fallen by a third since 1993, the last time the federal gas tax was increased.

Second, gas taxes don’t keep up with increasing fuel economy. The average car on the road today uses little more than half the gasoline of the average car in 1970, plus growing numbers of electric cars don’t use gasoline or diesel fuel at all.

Third, federal and state gas taxes have paid for state highways, but most cities and counties don’t collect fuel taxes and must pay for their roads and streets out of general funds. While there is no reason why some people should subsidize other peoples’ travel, an even more serious result is poorly maintained infrastructure as most of the crumbling bridges and roads we keep hearing about are locally owned, while state highways paid for out of user fees tend to be in much better shape.

Finally, gas taxes do nothing to mitigate one of the biggest problems in our cities: traffic congestion. While airlines, hotels and other businesses deal with fluctuations in demand by varying prices, auto drivers pay the same fuel tax whether they drive at rush hour or at midnight.

This problem is especially critical because highways are one of the few things whose supply declines when demand increases. A free-flowing freeway lane can move about 2,000 cars an hour. But if traffic slows due to congestion, flows can decline below 1,000 cars an hour. Such roads will remain congested for hours after traffic demand falls below 2,000 cars an hour.

Read more here.

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