Take a short trip in a car and it’s easy to see that many roads are in dire need of work. Thankfully, states have a system of coming up with money for many roadway needs: the gas tax. But in many states, revenue from the gas tax doesn’t fully cover infrastructure needs, explains Matthew Dorfman SM ‘07 and Travis Dunn SM ’05, PhD ’10, co-founders of D’Artagnan Consulting. One reason for the shortfall is increased vehicle fuel efficiency—people buying less gas means less gas tax being paid.
“When fuel efficiency goes up, gas tax revenue goes down,” Dorfman says. To solve this revenue problem, Dorfman and Dunn say it’s time to get rid of the gas tax as a means of funding roads, and, instead, charge drivers to raise revenue in a new way.
That’s why in California 5,000 drivers are now tracking their miles with the help of an app or GPS device. For each mile they cover, these drivers are charged a hypothetical 1.8 cents. These drivers are part of a pilot program facilitated by D’Artagnan Consulting that explores replacing the gas tax with usage fees. The road usage fee works simply: Users pay a set fee based on the number of miles they drive, much in the same way people pay for their electricity or water based on the amount they use. Drivers pay only for the number of miles they spend on the road. Dorfman and Dunn say the idea for a usage fee for roads is based partly on covering revenue gaps—studies show usage fees would raise more revenue than current gas taxes—and partly on changing the way people think about driving. “We’re trying to convince people to treat the roads like a utility. No one knows why they are paying what they are paying, so there is a disconnect. We’re trying to get people to think differently,” Dunn says.
Dorfman says this approach to the gas tax issue—part strategy and part innovation—was driven by his experiences in MIT’s Technology and Policy Program. “It’s not just about the tech and the software and the algorithms,” he explains. “We have seen examples to dealing with this that focus exclusively on the tech part. They always fail because by just focusing on technology you miss the chance to connect to people,” he says.
The future of usage fees for roads remains to be seen, but Dorfman and Dunn are encouraged by the number of states exploring the idea—Washington and Minnesota have also run pilot programs and Oregon, which also worked with D’Artagnan Consulting, now offers a usage charge program as an option to its drivers. Singapore and London have used electronic road pricing to reduce congestion for years.
Dorfman and Dunn say that no matter what policy changes are made, Americans need to move away from the gas tax. “Relying on fuel consumption to pay for roads is like relying on taxes from cigarettes to pay for healthcare services. You want to stop people from relying on that,” Dunn says.