Saturday, December 31, 2016

Part 6 - Some States Experiment With New Ways to Fund Roads

This is the sixth in a eight-part series on gas tax, roadbuilding and electric vehicles. You can find links to the other parts at the bottom of this post.

In 2013, Oregon lead the way with a voluntary “usage tax” program. Using either a GPS-device (kind of creepy) or odometer readings, 5,000 owners of any car that gets more than 55 miles per gallon are charged a flat annual fee of $542.50, or a usage fee of 1.55 cents per mile. Gas tax paid at the pump is refunded by the state to avoid double taxation. I like this because it's a program that doesn't discriminate between electric vehicles and efficient conventional ones, and comes closer to charging for actual use of roads and bridges.

There are several benefits to this payment scheme. Primarily, people pay for the miles actually driven regardless of the type of vehicle (electric or conventional fuel). I also think that there could be an additional benefit to this type of charging in arrears because if drivers actually see the tax on a per mile basis, they might be encouraged to drive less. This is a behavior that would benefit everyone; fewer miles equals less road wear and tear, less pollution (formed by combustion engines or electric power plant emissions), less noise pollution and less road congestion. It could also encourage healthier behaviors such as biking, walking, carpooling or trip consolidation. It could also improve quality of life by encouraging less time in cars and more time at home. The Oregon program became operational by July 2015.

In terms of tracking mileage as is being done in Oregon, some people are not going to like the GPS option. I think a pure odometer reporting mechanism would be a better, more private option. However, since the tax situation is state-based, perhaps the GPS option is necessary to only charge the additional tax for miles driving within the state, or to prevent double paying when using toll-roads. There is also a problem with buying fuel outside the state and where taxes should be paid or refunded.

Here is an example of the benefits of seeing a tax in action to change behavior. A Dutch study showed that information, feedback and suggestion can change behavior. An experiment was done with 5,000 participants divided into three groups; group A) received information about their energy consumption, B) received information and feedback about consumption, and C) information, feedback and suggestions for further reduction. "The results suggest that feedback through web applications does indeed increase perceived consumer awareness and reduces electricity consumption. Experimental groups scored an average much lower in terms of energy savings compared to the control group. Customers were also satisfied with what they had learned from participating in the experiment, implying that their awareness of electricity consumption had increased," (Hemmes, Papyrakis and Beukering)

In Massachusettes, one proposed source of supplemental income is from charging owners of electric vehicles an additional registration fee. The proposed bill was pushed by Representative Bradley H. Jones (R-North Reading), who called the issue “really one of equity,” making sure that everyone who uses the roads is pitching in. While Jones' bill, which called for an annual $100 registration fee for all-electric vehicles, fizzled in Massachusetts state legislature, other states already have such programs in place. The problem I see with an EV registration fee is that it does not take into account the actual miles driven. If an electric vehicle due to it's inherently limited range can't drive $100 worth of road tax, this becomes a regressive tax that's also "unfair."

I think there is one final consideration to take into account when figuring out a new road tax scheme. For non-commercial vehicles, weight and size are not currently measured or taken into account for road tax with the exception and assumption that they will use more fuel. My thought is that a Smart Car is two or three times shorter than a club cab truck, and is many times lighter. Because it literally occupies less space on the road, and applies far less weight to the road, should it not pay less tax than a large, heavy vehicle? To make my point, (and I know this is absurd, but work with me) if we ONLY drove 11-foot long smart cars, would it be possible that we'd need fewer lanes, shorter highway on and off ramps, less street parking, etc? Again, the point is only to show that yes, we'd need less road infrastructure. I think those vehicles that take up more space and exert more damaging weight on roads should also pay their fair share.

In Part 7 I disassemble the Highway Trust Fund and see that it isn't suffering because of electric vehicles. It's got much bigger problems.