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Declines in Driving Complicate Vehicle Tax Changes

A new study suggests the driving habits of Americans may be changing faster than lawmakers can figure out how to tax them.

Fewer Americans are becoming licensed drivers, and those who get behind the wheel aren’t driving as many miles, a trend that threatens the long-term viability of the highway-financing overhaul favored by many transportation experts.

The idea of charging drivers based on how many miles they drive — rather than how many gallons of gas they pump — has been touted as a fairer and more effective way to raise money to pay for road, bridge and transit projects. The system would capture the use of the roads by operators of fuel-efficient and alternative-fuel-powered vehicles, experts say, and raise more money to plug the growing gap between Highway Trust Fund revenue and spending needs.

But a study released last week by the U.S. Public Interest Research Group, a coalition of state-level progressive-policy organizations, raises questions about whether a vehicle-miles-traveled tax really is the long-term answer to the problem.

The study projects that the number of drivers who will be hitting the roads in the decades ahead will fall far short of federal government projections.

“It looks like our transportation system and how we spend on it is out of sync, especially when we’re looking at who’s going to be using and paying for it in the future,” said Phineas Baxandall, a senior analyst at the U.S. PIRG Education Fund and co-author of the report.

Baxandall’s research found that many tech-savvy millennials — the generation still entering the workforce — are using cars for transportation less and instead using smartphones to find information about transit options or to hail taxis.

Starting in about 2001, according to Census Bureau-collected numbers, the per-capita vehicle miles traveled began to decline. Raw data on the nation’s cumulative miles traveled as reported by the Federal Highway Administration show that while there have been seasonal fluctuations, the nation is driving a lot less.

And the weak economy is not the only explanation, Baxandall said. National vehicle miles traveled, which peaked at an annualized rate of about 3.04 trillion miles in 2007, are now running at an annualized rate of about 2.96 trillion miles per year and trending downward.

“Historically you see [gross domestic product] and [vehicle miles traveled] tracking each other closely,” Baxandall said, “but not anymore.”

That could complicate efforts by vehicle-mileage-tax supporters such as House Budget Committee member Earl Blumenauer, D-Ore., to prod Congress toward adopting the levy.

His home state is in the process of wrapping up an extensive pilot project in which participating drivers paid 1.6 cents per mile and received a refund of the state gas taxes they paid.

In December, Blumenauer introduced a bill that would mimic that pilot program at a federal level. At the time, he said his legislation would allow officials to evaluate possible methods of collection while protecting the privacy of drivers and administering the program efficiently.

An aide says the congressman plans to introduce a new version of the bill in the next few weeks.

The idea of a VMT tax appears to be gaining at least some modest traction on Capitol Hill.

House Transportation and Infrastructure Chairman Bill Shuster, R-Pa., said late last year that he thinks a mileage tax may be the best way to shore up the Highway Trust Fund.

“There’ll be a shorter-term fix,” he said. “But longer term, vehicle miles traveled may be the only way to stop the decline.”

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