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Sales Tax, Gas Tax, Mileage Tax: How To Pay For America's Roads?

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Sales Tax, Gas Tax, Mileage Tax: How To Pay For America's Roads?

On the right, many groups take issue with McDonnell's plan to rely on sales taxes for roadway funds. The Competitive Enterprise Institute, a libertarian think tank, says that McDonnell is correct when he insists that the gas tax is stagnating. However, CEI also points out that the gas tax may be the most accurate gauge of road usage and therefore, the best source of revenue.

CEI's Marc Scribner insists that "New vehicle fleet and driving trends are quickly rendering the fuel tax obsolete. But abandoning the user-pays/user-benefits principle, which has long guided transportation funding in the United States, is not the answer." Instead, he says that "[s]trengthening the user-pays principle through all-electronic tolling and other mileage-based charges is the most prudent and fiscally conservative approach."

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Meanwhile, just down the (increasingly bumpy) road to Washington, D.C., the Government Accountability Office seems to echo some of Scribner's ideas. After studying the issue, the GAO suggests that the federal government should consider taxing drivers on vehicle miles traveled (VMT).

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There's some truth to the CEI's claim that relying on sales taxes for roadway funding is a bad idea. Sales taxes fluctuate wildly and don't necessarily reflect roadway usage. (And theoretically, you'd like the two to mirror one another.) Moreover, sales taxes typically place a heavier burden on lower-income Americans, some of whom may not drive at all.