A VMT pricing system will have three major cost components. First, there will be the capital investment costs to enable the implementing agency to administer VMT charges. These will include costs for items such as hardware, system development, and start-up. These costs will likely be large--preliminary research conducted for U.S. DOT estimated initial agency capital costs for a comprehensive (passenger vehicle and truck VMT system) in the range of
Second, there is the cost associated with installing technology (e.g., GPS receivers/VMT charge calculators) in the vehicle fleet, which is currently difficult to assess. Most trucks already have equipment with GPS receivers, meaning that the costs of installing a system (VMT charge calculator) would be less. If done as standalone units that are retrofitted into existing vehicles, the cost would be relatively high. But if the necessary hardware were part of a broader vehicle technology platform that is installed in vehicles as original equipment on a large scale, the incremental cost to enable VMT pricing, on an individual vehicle basis, could be small.
The third cost component of comprehensive pricing will be the recurring cost to administer it. Preliminary U.S. DOT research estimates that administrative costs for a national system of road pricing using GPS technology would be 1.7 percent of estimated revenues (equivalent to the cost of processing credit card transactions). Although this is more than the cost of administering the current motor fuel taxes, estimated at 1.01 percent of revenues, it would still represent a comparatively inexpensive fee to administer. n7 One study of moving to a truck VMT system for
Ensuring That Trucking Pays it Full Costs
There appears to be some evidence that truck freight is not paying its fair share, not just on an overall basis but for certain trucks and on certain routes. As the DOT found in its last cost allocation study:
As a class single [truck] units will pay less than their share of highway costs, but the lightest single units will pay more than their share of highway costs. Combination trucks as a group will pay 90 percent of their highway cost responsibility in 2000, but like single units, there is large variation depending on the weight of the vehicle. Combination trucks registered at less than 50,000 pounds will pay 60 percent more in user fees than their share of highway costs while combinations registered over 80,000 pounds will pay on average only about 60 percent of their highway cost responsibility. n10
If this is still the case, it suggests that trucking enjoys a defacto government subsidy of about 10 percent of total highway cost imposed, especially when compared to the freight rail industry which largely pays for its facilities and operations through its own revenue. As such, it suggests that increases in truck fee payments, especially if structured through VMT system which can more accurately levy fees that match costs imposed, would not only increase revenues for the HTF, but would increase freight system efficiency.
This is especially important in the context of freight rail and trucking competition. If trucks are not paying their full costs, then rail is at an unfair competitive disadvantage. But rather than address the problem of subsidy with adding yet another subsidy (e.g. a tax incentive for rail investment) a better policy would be to reduce the subsidy to trucking by requiring them to pay their full costs. As such, the Commission recommended that
n1. Ideally any vehicle miles traveled system for heavy vehicles would charge by axle weight, since this is the factor most correlated with pavement damage. Real-time axle weight sensors have been developed, but they would have to be fully tested before widespread deployment would be possible.
n3. Transportation Research Board, Paying Our Way: Estimating Marginal Social Costs of Freight Transportation (
n4. Dolla and Schaffe, op. cit. note 20.
n5. Presentation to the
n6. Based on preliminary analysis provided by the U.S. DOT.
n8. "A Practical Approach to Truck VMT Fees Including Some Financial Implications and Possible Impacts on Traffic Congestion."
n9. Based on supplemental information provided by the
Read this original document at: http://transportation.house.gov/sites/republicans.transportation.house.gov/files/documents/Rob%20Atkinson--Testimony.pdf
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