Many commenters in the toll technology post are asking what the point of a vehicle miles traveled tax would be. Several things to note. First, as I mentioned in the original post, this technology might also make it easier to do congestion tolling, which would be of enormous economic and environmental benefit. Second, I think we should increase the gas tax, whether or not we adopt a VMT. Oil dependency is pretty obviously a nefarious economic force, and I think it’s worth encouraging drivers to get off the black stuff. I’m also clearly in favor of carbon pricing, which would have a small but positive impact on gas prices.

Third, increasing gas taxes isn’t a very good way to pay for long-term infrastructure expenses, because higher gas taxes make people use less gas. So you increase the tax, and then people substitute away from the tax, reducing revenue, and then you can increase the tax again, and consumers will substitute away even more and revenues fall again, and so on. Higher taxes encourage efficiency, then a move to hybrids, and then a move to electrics, at which point you no longer have any tax revenue.

Using gas taxes as a revenue source also creates bad incentives for planners, who are then encouraged to increase fuel usage, and therefore driving, so as to get a larger refund from the feds. States with large transit portfolios get the shaft under a gas tax system.

So a gas tax is a good idea on its own, but its not sustainable as a long-term revenue source. We therefore need to find something else to do the job. My preferred place to begin is congestion tolling, but a VMT tax seems like a decent option, as well.