How $7 Can Change U.S. Transportation

It’s time for a European-style gas tax in the U.S.

Yossi Sheffi | MIT

There is no easy way to present this idea, so I’ll go right ahead and state it plainly.

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If I could wave a magic wand, I’d impose a hefty gas tax on Americans.

If I could wave a magic wand, I’d impose a hefty gas tax on Americans. And by “hefty” I mean of the order of 50 percent to 70 percent. I would also require a different money allocation mechanism for the funds generated by the tax.

I can already hear the howls of anguish; many of them from my closest friends and colleagues. But before you dismiss the idea of a substantial tax on gasoline, please hear me out.

Here is why this is that rarest of animals: a constructive tax.

Bridging Investment Gaps

The tax is revenue-neutral. In other words, the money generated by the gas tax is used to reduce or eliminate other taxes, and/or to make much needed investments (eliminating the need to raise other taxes).

I’m firmly in the investment camp, and more specifically, on the side of infrastructure investments.

The United States is falling apart. Our transportation infrastructure is crumbling as a result of chronic underinvestment. This is not only a safety issue. Roads, bridges, ports, tunnels, waterways etc. are vital trade arteries that connect American businesses to markets at home and abroad. If you doubt the power of modern infrastructure to make a country more competitive, take a look at China’s massive building program.

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We do not have a national strategy for maintaining the country’s transportation systems.

We do not have a national strategy for maintaining the country’s transportation systems. A symptom of that malaise is the lack of a long-term mechanism for funding vital infrastructure investments.

Another symptom is the uncoordinated investments now being made in U.S. East Coast port facilities. The Panama Canal is being enlarged to accept bigger ships, and each port on the East Coast believes that they will attract these vessels. It’s an example of local decisions that are sub-optimal on a global level.

Opponents of a sizable gas tax might argue that politicians will inevitably misuse the funds to underwrite wasteful endeavors such as pork barrel projects. But it is possible to cordon off the proceeds and ensure that the money is used appropriately.

Since the U.S. transportation system is national, most of the decisions should be made on a national level. Perhaps an “uber” decision-making group can be created much like the commissions that oversee military base closings. The idea is to minimize the politics machinations involved so that sound policy can be implemented.

Driving Cleaner Cars

There is nothing like a monetary incentive for changing consumer behavior. Pricier gasoline stimulates demand for more fuel-efficient vehicles and boosts the country’s environmental performance. Who knows what new transportation technologies will emerge when people are incentivized in this way.

Energy Independence

Fuel-efficient transportation cuts gasoline consumption and reduces the nation’s reliance on foreign powers to supply us with oil. Some of these powers are not exactly desirable trading partners. There may be less need to send American military forces overseas to protect these oil supplies. And developing technologies such as fracking to extract oil domestically – even though the long-term impacts of these methods are largely unknown – is less urgent.

Cutting Congestion

The gas tax does not create a drivers’ Valhalla where every road is an empty expanse of asphalt. But it does discourage unnecessary driving and encourages vehicle sharing, thereby easing the congestion problems that bring some of our cities to a virtual standstill. It also encourages the use of smaller cars freeing up more space in parking lots and along city curbs.

Fewer Regulations

Traditionally, we seek to control vehicle tailpipe emissions through government regulation. The gas tax achieves this by changing our driving habits; not by creating new official standards and more layers of government bureaucracy.

The idea that this will never work flies in the face of the reality of 450 million Europeans who pay $7-$9 per gallon for fuel and have been doing it for decades. That’s my pitch for a European-style gas tax. After affording yourself some time to get over the initial sticker shock, do you agree that it makes a lot of sense? goldbrown2

This article first appeared on LinkedIn in a series of posts in which Influencers explain what they wish they could fix — and how. Read all the stories here and write your own (please include the hashtag #FixIt in the body of your post).

Yossi Sheffi is the Elisha Gray II Prof. of Engineering Systems at MIT, where he serves as Director of the Center for Transportation and Logistics.

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