Tax revenue from gasoline and diesel fuels help pay for road and highway maintenance in Indiana. But shrinking revenues has officials in several states looking for new ways to fund road maintenance.
Every time you fill up your gas tank, you’re paying taxes. There’s a 7 percent sales tax and then there’s the 18 cent gasoline tax. Neither of them are indexed to inflation, nor have they been adjusted in a decade.
Some in Indiana say that’s a problem. Indiana Department of Transportation spokesperson Will Wingfield says the revenues from the fuel tax pay for the maintenance of Indiana’s roads and highways.
“There has been a decline in fuel tax revenue as a result of increasing gas prices,” Wingfield said. “More fuel efficient vehicles and various economic factors.”
The Indiana Chamber of Commerce recently laid out legislative proposals they’ll be pushing in 2014. One of them is a push for the Indiana legislature to start investigating a new concept that’s been brought up in other states – the Vehicle Miles Traveled tax, or VMT tax. The basic idea is that motorists are taxed directly on the miles they drive, instead of indirectly on the fuel they buy.
Chamber of Commerce vice president Cameron Carter says VMT is a way for states to keep up with changing vehicle technology.
“Fuel taxes today do not capture the new propulsion technologies that we’re experiencing,” Carter said. “I mean if you only fund your roads and highways through a gasoline excise tax, and in the future we’re all driving electric cars, then who pays for the roads?”
Oregon has already implemented a pilot program, and several other states have been considering similar studies. In the Oregon program, the state outfitted volunteers with wireless transmitters that kept track of miles traveled. By the end of the program, state officials concluded the system was “feasible.”
However, those tracking devices have privacy advocates uneasy. Indiana University economics professor Bruce Jaffee says he isn’t a fan of the VMT tax because of the enforcement cost.
“The only ways to determine how many miles people drive a year is either through some sort of monitoring of how much and where people drive,” Jaffee said. “And with our discussion and concern about what the NSA is doing nationally, having GPS systems that monitor where and how much we’re driving may not go over very well, especially in a politically conservative state like Indiana.”
The Indiana Chamber of Commerce’s current proposal regarding the VMT tax is for a study only.