Furchtgott-Roth: Higher Fuel Taxes Today, Pay-Per-Mile Tomorrow

Friday, 30 Aug 2013 12:05 PM

By Michelle Smith

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States raising funds for their own roads is "the wave of the future," says Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute and former chief economist of the Department of Labor.

To cover the growing costs, the states will have to develop innovative new streams of revenue, she writes in an article for MarketWatch.

Cars are becoming more fuel-efficient and the number miles that Americans drive is declining. As that happens revenues from fuel taxes are also falling, leaving insufficient funds to maintain and build the nation's roads, Furchtgott-Roth notes.

Editor’s Note:
Weird Trick Adds $1,000 to Your Social Security Checks

The federal government has long footed much of the bill for America's infrastructure by tapping the Highway Trust Fund. But that pot of funds has been running a deficit since 2008, and according to the Congressional Budget Office (CBO), $35 billion has already been transferred from the Treasury to maintain a positive balance.

The CBO laid out three options for policymakers to consider to keep the fund out of the red: cut spending, transfer more money from the Treasury and either raise the gasoline tax or find another source of income.

Congress has staunchly resisted the idea of raising fuel taxes, but Furchtgott-Roth says the federal government is going to cut its spending and find another source of revenue — the states themselves.

There is no longer any logical reason why the federal government should be responsible for funding state roads, she writes. The Highway Trust Fund was set up in 1956 to pay for the interstate highway system and was supposed to be terminated in 1972 when the project was slated for completion.

Many states recognize that they are not going to be able to rely the trust fund as they have in the past and some are have already taken matters into their own hands.

Oregon, Arkansas, Illinois, Maryland, Vermont, Virginia and Wyoming have decided higher taxes are the ideal way to pay for infrastructure, Furchtgott-Roth reports.

But even with higher taxes, there is the continuing push toward greater fuel efficiency, which erodes the benefits.

Furchtgott-Roth points out that President Obama advocates electric cars, but notes that those vehicles don't use fuel, which means their drivers don't have to pay to use the nation's roads.

In the future, roads will need another stream of funding, she argues.

The most obvious substitute for fuel taxes is to charge road users directly for vehicle miles traveled (VMT), enabling them to get the roads they are prepared to pay for, writes Furchtgott-Roth.

The technology already exists and a successful pilot program has been conducted in Oregon. The state now has legislation supporting another program whereby 5,000 motorists will test a system of paying VMT tax instead of gas tax, she notes.

The Gallup poll of 1,018 adults taken April 9-10 found 66 percent of respondents would vote against a gasoline tax, while only 29 percent would support it.

Editor’s Note: Weird Trick Adds $1,000 to Your Social Security Checks

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