The way Maine pays for its road infrastructure is nearly a century old. What might have made sense (and it’s not clear that it did) in an age of flappers and silent-screen sheiks is wildly outmoded today.
A 3,000-pound 2022 Honda Civic sedan like this one, driven 10,000 miles a year, has much less of an impact on the state’s roadways than would a five-year-old, 4,500-pound, gas-powered Ford F-150 pickup driven 50,000 miles a year. Honda/TNS
Drivers’ key contributions to revenue for roads are the state gas tax, currently 30 cents per gallon, and excise taxes levied by the cities and towns. With increases in fuel efficiency and the turn to hybrids and electric vehicles, gas tax revenues have been in free fall since before COVID-19 drove us into lockdown.
Meanwhile, the excise tax has always been nonsensical, because it is calculated on the basis of, to quote the Maine Revenue Services website:
The age of the vehicle.
Manufacturer’s suggested retail price (“MSRP”).
In other words, to calculate the excise tax, the state multiplies a car’s MSRP by a mill rate that declines (unevenly) year by year for the first six years, bottoming out at 0.004.
Piercing glimpse into the obvious: The wear and tear on roads is a function of physics, not economics or finance. Asphalt doesn’t care what arbitrary mill rate an actuary applies to an almost equally arbitrary sticker price.
What matters is the weight of the vehicle and the number of miles driven. If the weight of a car declined (erratically) every year for its first six years (and then mysteriously stabilized), assessing the excise tax partly based on mill rate and weight might make some sense. But cars don’t diet, and any calculation based on a mill rate is untethered from the physical world.
Regardless of its hypothetical monetary value, a brand-new 3,000-pound Honda Civic, driven 10,000 miles a year, causes much less wear and tear than a five-year-old, 4,500-pound, gas-powered Ford F-150 driven 50,000 miles a year.
Swap out the old-school Ford F-150 for the all-electric Lightning model, and you’ve got yourself a 6,500-pound truck.
Cars and trucks affect more than infrastructure, and environmental concerns should also be taken into consideration. A 5,000-pound Aston Martin DBX gets only 14 to 18 mpg, which means its carbon footprint is about twice that of a Civic.
To be clear, though, in assessing the excise tax – that is, to pay for the wear and tear on roads and the environment – what matters should be the differences in weight, miles per gallon and miles driven. The fact that the Aston Martin costs 10 times as much as the Honda is irrelevant.
There may be other factors to consider, as well. With the technology available in the Jazz Age, calculating two variables was probably as complex as anyone wanted to get. We can easily handle more today.
Regardless, to pave the way for infrastructure solvency in the 2020s, we have to trade in our revenue stream from the 1920s for a newer model.
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