UI study: drivers would accept new kind of highway tax

(Photo courtesy of Eric Stuve)
(Photo courtesy of Eric Stuve)

The days when Iowa motorists pay for their highway use through motor fuel taxes at the pump may be numbered.

A $14 million study for the federal government by the University of Iowa to be released soon will show that the driving public would likely accept an alternative highway use tax that would track the number of miles each vehicle travels and assess tax on a per-mile basis.

The tax system is called “VMT” for vehicle miles traveled. It had some study participants worried that “Big Brother” wants to watch them more closely.

“If something like this was to move forward, the privacy issues will always be there,” said Paul Hanley, director of transportation studies for the UI Public Policy Center. “They’re not insurmountable.”

The vehicles of 2,500 motorists in Eastern Iowa and 11 other areas of the United States were equipped with electronics that used GPS, a small data recorder, and a cellular data link to track their mileage and transmit it to the research team.

“Once it’s explained there’s a GPS in there, they immediately think of tracking,” Hanley said.

Those worries dissipated over the eight months in which drivers used the system, however. They came to understand that the only data being collected was the number of miles they traveled or, in another phase of the study, the number of miles they traveled by tax jurisdiction.

Only about 20 percent of participants began the study in favor of a VMT tax, with 80 percent opposed. By the end of the study, 70 percent were OK with a VMT tax, and only 9 percent were strongly opposed.

The government now collects taxes to pay for highways using state, federal and even local taxes on each gallon of petroleum-based fuel sold. Gov. Terry Branstad expressed serious concerns about the future of that system last week as he appointed a study commission to look at alternatives to meet the state’s underfunded highway needs.

“With more electrical cars and hybrids, the traditional way we’ve funded roads may not be the future,” Branstad said. He said the future could also involve “entire fleets of trucks running on natural gas.” Natural gas is not taxed as motor fuel in Iowa.

Oregon, Texas and other states are looking seriously at enacting VMT taxes for electric vehicles that would not pay motor fuel tax. Such highway use taxes seem to be generating the most interest among states increasingly concerned about relying on motor fuel taxes, according to Nancy Richardson, the retiring Iowa Department of Transportation Director who will co-chair the study committee.

Hanley said the UI found that a VMT system would have to make careful trade-offs between privacy and “auditability.” Motorists wanted the privacy of their movements protected, but as the study progressed they wanted more detail on their monthly tax statements such as daily miles traveled so they could ensure that they were being taxed correctly.

“They don’t trust the government to send them the right bill,” Hanley said.

The UI team has been asked to present its findings at a congressional hearing, but is awaiting follow-up questions from the United States Department of Transportation before completing its work.The type of electronic equipment used in the system likely couldn’t be implemented on a nationwide basis for five to 10 years, Hanley said. The type of cellular service used to transmit the data is too expensive at present rates, and the high cost of deploying the equipment in more than 600 million existing vehicles could also outweigh the benefits, Hanley said. Requiring that the systems be installed as original equipment in new vehicles would significantly reduce the cost, Hanley said, and reduce the vulnerability of systems to tampering.

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