Lee Munnich, Senior Fellow, Hubert H. Humphrey School of Public Affairs, University of Minnesota
October 20, 2011
University of Minnesota researchers recently examined whether replacing the existing gas tax with mileage-based user fees (MBUF) would be a more sustainable system for funding the nation's surface transportation system. Although MBUF rank strongly in the study’s five transportation finance principles, the major obstacle for implementation may be convincing the public.
On October 20, Lee Munnich presented the rationale, technology, and transitional issues in shifting from fuel taxes to mileage-based user fees at a CTS Research Seminar. He also explained that the study’s findings were intended to set the stage for a policy discussion on these issues and lay the groundwork for an extensive public outreach effort.
The research team compared a fuel-tax-based system and an MBUF-based system against five transportation finance principles: efficiency, equity, revenue adequacy and sustainability, environmental sustainability, and feasibility. Gas taxes ranked strongly in feasibility, but were weak in terms of efficiency. And although MBUF ranked well in the other categories, it received a weak rating in administrative and political feasibility—largely due to high implementation, operation, enforcement, and compliance costs.
Since many implementation scenarios would require fuel-tax collection to coexist with MBUF over a significant period of time, the researchers suggest creating a new transitional tax structure that incorporates three components: a lower base rate for fuel taxes, a compensatory mileage-based charge to fund road and bridge construction (including right-of-way acquisition), and a local VMT charge option to replace the patchwork of local sales taxes used to fund local roads.
While transportation leaders have long discussed why fuel taxes are no longer a sustainable transportation funding system—and recommendations by two national commissions established by Congress have already led to pilot tests across four states—public support still has a long way to go. The researchers recommend that proponents of MBUF understand not only the difficult transitional issues and questions involved, but also the education and outreach efforts that will be needed to move forward the implementation of a mileage-based fee system.
“This is not going to be an easy process, if it does occur,” said Munnich.