How Eliminating the Gas Tax Can Help Reduce Vehicle Congestion in Texas Cities

By Regan Turner

On January 22, 2013, the Texas Tribune reported that some Texas state legislators were proposing a higher vehicle registration fee for drivers of electric vehicles (EVs) to ensure that they pay their share of the annual expenses of building and maintaining roadways.[1]  If this measure were to pass, Texas would join Washington State where a $100 annual fee on drivers of EVs went into effect this month.[2]

With the Texas Department of Transportation (TxDOT) holding $13 billion in debt, the state agency is looking for ways for fill revenue shortfalls.[3]  And as vehicles become more fuel-efficient or do away with the need for fuel altogether, the gas tax that accounted for 33% of the agency’s revenues of almost $7 billion in 2010 is no longer going to suffice.

Rather than addressing only the fact that EV drivers do not contribute to TxDOT revenues, Texas lawmakers should consider what sustainable cities and highways of the future will look like, and change legislation to incentivize public transportation, walkable cities, and EVs.

First, Texas should do away with its gas tax and increase annual vehicle registration fees.  In 2010, vehicle registration fees in Texas that average $58 per vehicle accounted for $1.11 billion in revenues for TxDOT, while gasoline taxes brought in $2.29 billion, or roughly twice the amount generated from vehicle registration.[4]  While I am not suggesting that Texas emulate California, the Sunshine State charges drivers anywhere from $250 to $400 in annual registration fees, so there is significant capacity for Texas to increase registration fees, thereby incentivizing the use of public transportation.

Next, Texas should assess a mileage fee on vehicles due at the time of annual inspection.  If the average Texan drives 12,000 miles per year, a fee of $0.01 per mile would cost a driver $120 per year, which is roughly the average amount paid per driver per year in state fuel taxes ($114).  The difference here is that all drivers pay the same amount toward road maintenance depending on how many miles they drive, regardless of their vehicle’s fuel source.

Opponents of this plan will say that drivers of vehicles not registered in Texas will then not pay any surcharge for the free roads that they use to travel or conduct business in Texas.  To solve this problem, either assess a toll at the time of a vehicle’s entry into Texas, or maintain the gas tax at the pump for out of state drivers by requiring drivers to swipe their driver’s license at the pump when paying.

These policies will cause drivers in Texas to recognize the costs associated with driving and therefore incentivize denser cities and the use of public transportation, biking, and walking.  Otherwise, Texas is on track to spend $400 billion in roadway infrastructure by 2035 with a broken business model that does not address the issue of vehicle congestion that will only continue to get worse.[5]

One thought on “How Eliminating the Gas Tax Can Help Reduce Vehicle Congestion in Texas Cities

  1. By Alison Ernst

    The headline of Regan’s blog post immediately caught my eye because it is so counter-intuitive; eliminating the gas tax will reduce congestion? The conventional logic, of course, is that a gas tax increases the cost of driving and thus will encourage people to drive less, or to drive more fuel-efficient vehicles. However, Regan goes on to make a very convincing argument for why, instead of a gas tax, which essentially exempts drivers of electric vehicles from contributing to roadway maintenance, Texas should instead implement a combination of higher vehicle registration fees and an annual mileage fee. It made me wonder why this solution was not being implemented, and I thought of a few potential obstacles.

    The first lies in the increased registration fee component of the program. While I agree that it would help the Texas Department of Transportation increase its revenues for road maintenance, I am concerned that it would have minimal effect on individuals’ driving patterns. Once a person has decided to buy a $10-20,000 vehicle, bumping up the annual fee by a couple hundred dollars seems insignificant, and likely would not affect their car purchase decision. In fact, oftentimes when a high upfront fee is required for some type of good or service, there is a tendency for the consumer to over-utilize it in order to ‘get their money’s worth.’ So, there is little likelihood that this component would decrease the number of cars on the road or the amount of driving an individual does, leaving congestion relatively unaffected. Additionally, because the congestion remains a problem, and the Texas DOT now has significant additional revenue for higher registration fees, the most logical solution is to widen the roads even further, which will have the opposite of the intended effect.

    The mileage fee that Regan mentions, though, should certainly encourage people to drive less frequently. However, my main concern is that in order to avoid the large upfront annual fee, drivers may avoid their annual maintenance appointment, which not only reduces the revenues Texas DOT can collect, but also increases the likelihood of unsafe vehicles being on the road.

    Finally, although the main problem addressed in the post is congestion, not pollution, this solution may exacerbate it, as EVs no longer benefit as much from the avoidance of fuel costs.

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