As a follow-up to my last post about roads and transportation matters, I wish to note that the AP has reported that Transportation Secretary Ray LaHood wants to get more revenue to finance federal transportation infrastructure.

Although the article mentions enhancing revenues through “other funding options” such as “more tolls for highways and bridges and more government partnerships with business to finance transportation projects,” the main focus of the report is a push to charge taxes per mile driven rather than the current flat 18.4-cent per gallon gas tax. (You also pay state gas taxes per gallon: 24.5 cents in Utah.)

LaHood says that “everyone” agrees that the current “highway trust fund is an antiquated system for funding our highways.” What he means by that is that people have been buying less gas per mile driven due to more fuel efficient vehicles. When they buy less gas, they pay less gas tax. This means that government gets less revenue for roads without reducing the need to build and maintain them.

While a tax calculated on miles driven would resolve funding reductions caused by fuel efficiency, it would not solve the chief problems that led to the last year’s $8 billion shortfall. The current economic downturn has reduced actual miles driven per vehicle. Last year’s skyrocketing gas prices also reduced miles driven. So, even if we had LaHood’s tax-per-mile plan in place, it would not have made much difference in current funding.

Although the article doesn’t make it very clear, LaHood is trying to address a long-term trend rather than short-term fluctuations. While it is important that our highway funding mechanism be kept up to date with cultural and technological changes, it is also essential to consider the economic and moral costs of implementing a plan such as the one suggested by LaHood.

To charge taxes per mile driven, the government would have to know how many miles each vehicle had traveled. Assuming this could be effectively accomplished without unduly infringing on personal liberty, (a fairly broad assumption,) there would need to be an efficient tax collection methodology.

The AP writer says:

“The system would require all cars and trucks be equipped with global satellite positioning technology, a transponder, a clock and other equipment to record how many miles a vehicle was driven, whether it was driven on highways or secondary roads, and even whether it was driven during peak traffic periods or off-peak hours.

“The device would tally how much tax motorists owed depending upon their road use. Motorists would pay the amount owed when it was downloaded, probably at gas stations at first, but an alternative eventually would be needed.”

Does this sound a little Big Brother-ish to you? Not to worry. The AP reports:

“Privacy concerns are based more on perception than any actual risk …. The satellite information would be beamed one way to the car and driving information would be contained within the device on the car, with the amount of the tax due the only information that's downloaded, he said.”

Of course, gas pumps would need a way to read the data on that device. Moral hazards aside, implementing these devices on vehicles and gas pumps would not be without cost to the taxpaying consumer. Like most politicians and bureaucrats, however, LaHood seems to be blithely unconcerned about (or unaware of) these hidden taxes that would be levied directly or indirectly on everyone (since we all directly or indirectly use the highways).

The moment you install regulatory devices on automobiles — especially ones that calculate tax — people will start finding ways to subvert the devices. Then we will need to implement a corresponding policing function, thus, raising costs even more. This is a wicked spiral that will lead to restrictions on the liberty of each person.

(A low-tech workaround would be to fill up gas containers like the ones you use for filling your lawnmower, and then dump the gas into the vehicle off site. Government would then need to create restrictions on this kind of activity. Gas station attendants would be forced to become law enforcers.)

Might there not be an upside to all of this? Sure. But only if more government intrusion is welcomed. If the devices were not simply one-way devices, the ability of emergency responders to get to the scene of a crash would be enhanced. So would the ability of law enforcers to track down stolen cars and fugitives. We would first need to address the question of whether these benefits would be worth the moral hazards involved.

We have a system of federal highways that are essential to our nation’s economy and wellbeing. This kind of infrastructure does not come free of charge. Those of us that benefit from these roads — that would be all of us — have a responsibility to ante up our share for their development and maintenance. But it is essential that in devising systems to accomplish this objective, the higher goal of individual liberty be carefully guarded and maximized.

Our current gas tax system may be “antiquated.” Indeed, it may fail to adequately capture sufficient revenue to meet funding requirements. But at least it minimizes government intrusion. Businesses are tasked with collecting the federal tax on each gallon of fuel sold. The tax is collected while the taxpayers and their activities remain largely anonymous to the government.

While contemplating ways to address the long-term trend of declining revenues, let’s not throw away the best features of our current system. Let’s put liberty first on the docket instead of passing it off in some mumbling afterthought.

UPDATE: The Obama administration has nixed LaHood’s per-mile transportation tax idea, at least for now. Apparently some in Congress still want to pursue the idea, and a number of states are thinking about it as well.
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