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School of Public and Environmental Affairs

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Last modified: Monday, April 1, 2013

IU policy experts support 'low-tech' adoption of road user fees

April 1, 2013

BLOOMINGTON, Ind. -- The U.S. should adopt mileage-based road user fees to raise revenue to build and maintain roads and bridges, faculty members at the Indiana University School of Public and Environmental Affairs write in a recently published journal article.

Denvil Duncan

Denvil R. Duncan

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Denvil R. Duncan, assistant professor, and John D. Graham, the dean of the school, advocate implementing a mileage tax system using "simple, low-tech" methods to overcome inevitable objections related to cost and invasion of privacy.

They suggest privacy concerns will lessen as drivers get more comfortable with sharing information through social media and as insurance companies implement voluntary mileage-based rates. Thus, it may become politically feasible to implement fees that rely on GPS technology to track driving.

"There is never an easy time to propose a new tax, even one that replaces an existing tax," they write. But, with Congress debating tax reform, the time may be right for a new approach to transportation revenue, and "if the federal government takes the lead, many states are likely to follow."

The article, "Road User Fees Instead of Fuel Taxes: The Quest for Political Acceptability," will appear in the next issue of Public Administration Review and is now available online. The journal also will include a counter-argument by Bob Darbelnet, president and CEO of AAA, who argues that extensive pilot testing will be needed before the public will accept road user fees.

John Graham

John D. Graham

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At issue is the challenge of raising enough revenue to maintain the nation's roads and bridges at a time when vehicle fuel economy is increasing. The current funding system is based on per-gallon fuel taxes. But as drivers fuel up less often, the taxes raise less money.

Federal fuel taxes are producing about $27 billion, only half of what's needed to meet the minimal standard of maintaining the current level of highway performance, Duncan and Graham write. Experts agree that, absent a change, America's surface transportation system will deteriorate.

There is consensus that the best alternative is a system of fees based on vehicle miles of travel and vehicle weight, referred to as VMT-F. It meets the principle that people who use the highways should pay for their upkeep. And it can be designed so motorists who cause the most damage pay the most.

But implementing such a system will be difficult. Ideally, all vehicles could be equipped with global positioning system devices to track miles traveled. But while many new vehicles have GPS, it would be costly to retrofit used vehicles. A more difficult problem is the perception of invasion of privacy -- the idea that government could monitor citizens' location at all times.

The authors suggest implementing road user fees with a simple, low-tech approach. This could involve requiring motorists to self-report how much they drive, or checking odometer readings when registrations are renewed with state Departments of Motor Vehicles. No doubt there would be under-reporting, as there is with the federal income tax. But audits and the use of backup data from sources such as auto service centers and Carfax reports could keep it to a minimum.

Ultimately, a GPS-based system would be highly accurate and would allow for policy refinements, such as collecting bridge tolls and charging higher fees for driving that adds to congestion. While many people would resist letting government monitor their driving, Duncan and Graham suggest that could change.

They note anecdotal evidence that many young drivers are comfortable with sharing their whereabouts through social media, sometimes using location services on their smartphones. And insurance companies are developing "pay-as-you-drive" pricing for policies, which require the ability to track motorists' driving patterns by GPS. They write that "it is possible for the government to rely on the data collected by insurance companies to implement the mileage tax."

The article says research is needed on citizens' concerns about invasion of privacy and factors that can reduce those concerns, along with pilot studies to establish the cost of low-tech and GPS-based systems.