Mileage-Based User Fee Winners and Losers - RAND Corporation

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The result is that the real value of the fuel tax is steadily declining. While some states, such as Maine and Wisconsin, regularly adjust their fuel tax rates, federal fuel tax rates were last increased in 1993 (Ang-Olson, Wachs, and Taylor 2000; Federal Highway Administration 2010). Since then, as illustrated in Figure 1.1, the real value of the federal gasoline tax has declined by 42 percent. Without an immediate increase in the fuel tax rate, an unlikely event, this trend will accelerate over the coming years. Several sets of increasingly stringent CAFE regulations, currently applying to new light duty vehicles through model year 2016 and heavy duty vehicles though model year 2018, have been adopted by the Environmental Protection Agency (EPA) and the National Highway Transportation Safety Administration (NHTSA) since 2006 (US NHTSA 2011). The Energy Information Administration (EIA) projects that, given current policy and technology, the fuel efficiency of the overall vehicle population will improve by 25 percent between 2010 and 2030 (US EIA 2011a). This will cause the average fuel tax rate (per mile) to fall proportionately, prior to accounting for deleterious effects of inflation. Additional mandates to improve vehicle fuel efficiency, along with further technical advances to enable those reductions, are obviously possible, if not highly likely. Figure 1.1: Federal Gasoline Tax Rate, Real Cents per Mile Traveled, 1970 - 2010 1.8 1.6 1.4 2010 Cents Per Mile 1.2 1.0 0.8 0.6 0.4 0.2 0.0 1970 1975 1980 1985 1990 1995 2000 2005 2010 Year Note: The real tax rate is calculated using the CPI. Alternatively, it is possible to use a construction cost index, such as the previously described California Construction Cost Index, which might more accurately reflect the real value of the tax rate with respect to constructing transportation projects. However, the volatility of construction commodity prices could mask the underlying historical trends of increasing prices overall and increasing average vehicle fuel economy. Therefore, all dollar values in the dissertation, unless otherwise noted, are in 2010 dollars, after adjusting for inflation using the CPI (all urban consumers, all items, not seasonally adjusted, series id# CUUR0000SA0). Sources: Federal Highway Administration (FHWA), Highways Statistics Series, 1995-2009, Tables FE-101A, VM-201A and VM-1. Page 14 of 131
Additionally, fully electric vehicles (EV) and plug-in hybrid-electric vehicles (PHEV) are now being sold to consumers by major automobile manufacturers. While there are currently a small number of electric vehicles on the road, the market for this technology is poised to grow rapidly and could account for 5-15 percent of the automobile market by 2020 (Bedi et al. 2011). Estimates for sales volumes of EV and PHEV automobiles vary and are highly speculative but nonetheless stimulate further concern about the long-term viability of gasoline taxes because these vehicles pay little to no tax (Ang-Olson, Wachs, and Taylor 2000; Dignan 2010; Eisenstein 2010; Hajiamiri 2010). The real value of the fuel tax, relative to funding needs, will continue to decline as construction costs rise, vehicle fuel economy continues to improve and the number of EVs sold increases. It is unclear whether federal gasoline and diesel taxes will be able to generate sufficient revenue to maintain and improve the nation’s surface transportation network in future years. Three separate commissions were formed between 2003 and 2009 to review national transportation finance needs and sources of revenue. The earliest, the Committee for the Study of the Long-Term Viability of Fuel Taxes for Transportation Finance, was convened by the Transportation Research Board of the National Academies (TRB). 5 This committee met between 2003 and 2005 to consider the challenges and the benefits of the gasoline tax against the likely opportunities and obstacles of alternative sources of revenue (Committee for the Study of the Long-Term Viability of Fuel Taxes for Transportation Finance 2006). The committee concluded that fuel taxes would be viable over the next two decades but reform was necessary. Specifically, this committee recommended that fuel taxes should be maintained and increased in the short-term. The public sector should also begin to transition towards charging highway users directly based on the number of miles traveled, instead of on fuel consumption. The committee expressed support for expanded use of toll roads and toll lanes on free highways to better manage congestion and to generate some additional revenue. However, the committee endorsed taxes on miles traveled as “the most promising technique for directly assessing road users for the costs of individual trips within a comprehensive fee scheme that will generate revenue to cover the costs of the highway program” (Committee for the Study of the Long-Term Viability of Fuel Taxes for Transportation Finance 2006, 4). The 2005 federal transportation authorization bill, the Safe, Accountable, Flexible, and Efficient Transportation Equity Act: A Legacy for Users (SAFETEA–LU), created two separate commissions with similar mandates; both would assess current revenues and possible alternatives and make recommendations to Congress. Section 1909 of SAFETEA–LU established the National Surface Transportation Policy and Revenue Study Commission (2007). The “Policy Commission” consisted of 12 members. They presented their findings, which were not unanimous, to Congress in 2007. The Commission’s Chairwoman, Secretary of Transportation Mary Peters, was among three dissenting commissioners who argued that the primary problem facing the nation’s transportation system was not insufficient revenue but an inability to manage demand. Both the dissenting group and the majority of the Policy Commission agreed that the use of tolling and congestion pricing be 5 The candidate’s dissertation committee chair, Professor Martin Wachs, was one of the 14 members of this committee. Page 15 of 131
Page 1 and 2: CHILDREN AND FAMILIES EDUCATION AND
Page 3 and 4: Mileage-Based User Fee Winners and
Page 5: ABSTRACT The mileage-based user fee
Page 8 and 9: Lastly, I would especially like to
Page 10 and 11: 6. Future Distributional Implicatio
Page 13: 1. MILEAGE-BASED USER FEES MOTOR FU
Page 17 and 18: MOVING TOWARDS A TAX ON VEHICLE MIL
Page 19 and 20: THE EQUITY IMPLICATIONS OF MBUFS AR
Page 21 and 22: 2. THE EQUITY OF HIGHWAY USER FEES
Page 23 and 24: “regressive, progressive, or neut
Page 25 and 26: 3. DATA AND MODEL This chapter desc
Page 27 and 28: Table 3.1 Weighted Sample Means of
Page 29 and 30: values and their robust standard er
Page 31 and 32: Table 3.2 Table of Coefficients Lin
Page 33 and 34: Figure 3.1 Distribution of Price El
Page 35 and 36: This expression illustrates that th
Page 37 and 38: method used by FHWA to calculate th
Page 39 and 40: least fuel efficient vehicle is gre
Page 41: State fixed effects There are diffe
Page 44 and 45: gasoline tax with a flat per-mile t
Page 46 and 47: Alternative 3: Replace both the sta
Page 48 and 49: Alternative 8: Replace state and fe
Page 50 and 51: Disaggregating the change in taxes
Page 52 and 53: “relative share rate of return fr
Page 54 and 55: gasoline in the United States could
Page 56 and 57: The first method divides total fede
Page 58 and 59: Risk of global warming: The margina
Page 60 and 61: additional projections based on alt
Page 62 and 63: industry and public sector energy c
Page 64 and 65:
FLAT-RATE MBUFS ARE NO MORE OR LESS
Page 66 and 67:
Table 5.1 Percent Change in Average
Page 68 and 69:
Table 5.3 Change in the Consumer Su
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weighting of the changes in revenue
Page 72 and 73:
Table 5.6 Average Changes in Federa
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Table 5.7 Components of Welfare Cha
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The finding that increasing the rat
Page 78 and 79:
Table 5.10 Change in Consumer Surpl
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of adopting MBUFs. Specifically, th
Page 82 and 83:
Table 5.14 Percent Change in VMT an
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side by side for each alternative.
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The findings for other groups are m
Page 88 and 89:
Table 5.17 Average Change in Consum
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6. FUTURE DISTRIBUTIONAL IMPLICATIO
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e enacted. Figure 6.4 completes the
Page 95 and 96:
Table 6.1 Projections of Suits Indi
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change in consumer surplus for key
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7. CONCLUSION The purpose of this d
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The marginal costs of congestion an
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Commercial trucks were explicitly n
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The variable name for Hispanic stat
Page 108 and 109:
price series from the EIA. The “M
Page 110 and 111:
Table A.1 State Gasoline Excise Tax
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Table A.3 Household Type Categories
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CALCULATING THE CHANGE IN CONSUMER
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Revenue Revenue Revenue Method
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PROJECTIONS OF CHANGES IN CONSUMER
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Table B.3 Projections of Changes in
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Page 124 and 125:
Page 127 and 128:
LIST OF REFERENCES AAA. 2011. Your
Page 129 and 130:
Musgrave, Richard A., and Peggy B.
Page 131:
Wachs, Martin. 2003. Improving effi
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Mileage-Based User Fee Winners and Losers - RAND Corporation

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