Title: An equity analysis of fuel tax and VMT fee based on the revenue-neutral principle

Authors: Shunfeng Song; Grace L. Morris; Zong Tian

Addresses: Department of Economics, University of Nevada, Reno, NV 89557, USA ' Department of Economics, University of Nevada, Reno, NV 89557, USA ' Center for Advanced Transportation Education and Research, University of Nevada, Reno, NV 89557, USA

Abstract: Facing the challenges of the existing fuel tax system to sustainably support future transportation needs in the states, scholars and government officials are studying a vehicle miles travelled (VMT) fee system to replace or supplement the current fuel tax system. As is often the case with policy changes, concerns over the distributional impact of the VMT fee have been voiced by groups, especially those representing low-income households. Using the 2009 National Household Travel Survey, we calculate and compare the fuel tax and VMT fee that each household is paying or would pay if the revenue-neutral principle is applied, examine the burdens of the fuel tax and a VMT fee, and estimate the change from paying the fuel tax to paying a VMT fee. Our empirical results show that a revenue-neutral VMT fee would on average produce small income redistribution from the rich to the poor.

Keywords: fuel tax; vehicle miles travelled; VMT fee; revenue-neutral principle; income redistribution; equity analysis.

DOI: 10.1504/IJEME.2015.072561

International Journal of Engineering Management and Economics, 2015 Vol.5 No.3/4, pp.245 - 257

Available online: 19 Oct 2015 *

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