Monday, February 7, 2011

SVMT can replace lost gas tax revenue (and without using the dreaded MVET)

On January 29, 2011, the following message was sent to the Senators and Representatives who sit on the Transportation Committees of the Washington State Senate and House.

The MVET was a very regressive tax, as is the case with most of the taxes in this state (consistently ranked by every measure as the most regressive tax system in our country). Such an approach should never again be used to fund the transportation system.
Several bills introduced in the prior and current session, "Imposing an additional vehicle license fee on electric vehicles", include the premise that such fees are needed, "In order to mitigate the impacts of the diminishing motor vehicle fuel tax, and to create a system where each driver pays for a fair portion of his or her use of the road".
Right premise, wrong solution. Any such tax would be yet another regressive mistake.
Everyone recognizes that the current fuel tax is an inadequate and declining source of funds. Gasoline and diesel use is declining for many well-known reasons, so a fair alternative needs to be instituted to make up for that lost revenue.
The most straightforward, readily implementable, solution is to enact a VMT, or "Vehicle Miles Traveled", tax.
Here is my proposal for a Simplified Vehicle Miles Traveled (SVMT) method of fairly taxing all vehicles (not just electrics):
  • Every year, when the car tab fee is collected, the owner of each vehicle would be required to take it to a DOL office where the odometer reading would be recorded by a DOL clerk.  The owner would be required to certify that the odometer reading is accurate, much in the same way as is currently done when a vehicle is sold.
  • The SVMT tax would be calculated using the weight of the vehicle times the number of miles traveled since the last odometer reading –weight and miles traveled are the two most significant factors that cause wear and tear on the roads. All other factors (tire studs, etc.) can be ignored, since these are already taxed in other ways.
  • Inoperable vehicles would require an affirmed declaration by the owner stating the odometer reading. If the vehicle is not operable for the entire year, only a de minimis document fee would be charged.
  • It's already a federal crime to tamper with an odometer, so there's plenty of incentive to not cheat this kind of system!
  • The calculated SVMT tax could be paid in installments on a quarterly basis to reduce the impact on peoples' budgets, much like estimated IRS tax payments. Any unpaid SVMT tax would be a lien on the vehicle, collectible at time of title transfer.
  • An adjustment factor could be applied to the fee based on the average distance that people have to travel to meet their daily needs; so, some rural counties or ZIP codes might receive a percentage discount based on such an average. However, the application and amount of any such adjustment would be a political decision.
  • Because a great many commercial vehicles are registered in other states, a separate miles-travelled data collection system would be needed for all commercial vehicles; this should done as an extension of existing statutes that require log books, etc.
I'm very worried that some of the Washington State Transportation Commission's consultants have already started to recommend technically complex systems for measuring Vehicle Miles Traveled (VMT); their suggestions use transponders, GPS, and other expensive and often unreliable methods to determine vehicle movement. Any such approach will be extremely expensive to implement, could not possibly be deployed for many years (if not decades), and would be highly invasive of the public's right to privacy.
By comparison, the SVMT approach I have outlined could be implemented in one year for private vehicles using existing DOL offices and staff, with low startup costs for the software changes needed to record and track each vehicle's annual odometer reading.
As for the issue of out-of-state private vehicles, I believe that the net flow of in-state/out-state vehicles is so close to zero that this doesn't really matter.  I completely disagree with the position taken by some that a federal program is needed before a VMT can be adopted in our state. The current gas tax will also help balance this out.
Lastly, once an SVMT tax system is operational, the ever-decreasing gas tax collections will no longer be a worry, and could be viewed as a sort of "gas-guzzler" penalty for those who choose to drive less efficient vehicles.