The Carrot and the Stick Approach to Vehicle Tracking: What’s wrong with congestion pricing and Vehicle Miles Traveled Tax Schemes?

This article first appeared in the NMA Foundation quarterly magazine Driving Freedoms Winter 2016 edition.

Smart Growth supporters claim their transportation fixes will reduce congestion and lead to more accessible roads for all users. In practice, the opposite may be true. In the winter 2015 Driving Freedoms, a California NMA member described how congestion and travel times actually increased in Long Beach after implementation of Smart Growth measures.

And what about the impact of increased congestion: greater fuel use, more emissions/pollution, wasted productivity, more road rage incidents? Planners don’t seem to care about those issues. In fact, congestion presents an opportunity to implement additional driver-unfriendly policies like congestion pricing and the related Vehicle Miles Traveled (VMT) tax.

Congestion pricing schemes charge motorists variable fees for driving in certain areas at certain times. A VMT tax charges motorists based on how far they travel and can be used to supplement, or replace, the fuel tax. The two go hand-in-hand, and both rely on vehicle tracking technology to operate efficiently.

One of the latest such vehicle tracking schemes comes from—you guessed it—New York City. In August (2015), the New York Department of Transportation (NYCDOT) launched a pilot program called Drive Smart. It’s similar to Pay as You Drive insurance programs that monitor driving habits through an in-vehicle tracking device. Data collected include speed, hard baking and steering events, times of day and GPS location. In exchange, volunteers receive various incentives for choosing less congested routes or for traveling during off hours. They can also receive a 30 percent discount on Allstate insurance for driving safely.

NYCDOT says the program will help better understand how the streets network is used and how it can be improved. All well and good. But there’s something else going on. It’s also a test of the driving public’s willingness to be tracked, and by extension, what incentives facilitate that. So far, NYCDOT has used positive incentives to encourage participation—the carrot approach—but a citywide rollout may also require the stick.

No word yet on how well it’s working, but we are aware of one vehicle tracking program that is suffering from low participation. Oregon’s much vaunted VMT tax pilot program, OReGo, had hoped to have 5,000 enrollees by now, but so far only 900 have signed up, most from the Portland metro area.

The program also suffers from high costs. It was supposed to cost $2.8 million but has since ballooned to $8.1 million and will likely hit $12.7 million by mid=2017, assuming enough people sign up. All of which illustrates the point that VMT taxing programs are expensive. Estimates to purchase and install a tracking device range from $50 to $100 per vehicle at scale. Multiply that by the number of registered vehicles in a given state, and the costs to the driving public becomes astronomical. And this doesn’t include the costs of building the infrastructure to collect and report the data or the costs to administer the program.

Vehicle tracking also raises serious privacy concerns. VMT supporters claim privacy protections are a top concern and that VMT taxing schemes can be implemented without relying on GPS. In Oregon, drivers can choose their own method of mileage reporting—from basic odometer tracking to advanced GPS technology.

The odometer metering approach is less intrusive but can’t tell when a vehicle is traveling out-of-state or off-road. GPS tracking certainly can, plus a whole lot more. Sooner or later the tracking system will have to be standardized, and government and corporate interests won’t be able to resist gobbling up all that valuable location data.

The gas tax is still the most equitable, least expensive and most efficient way to fund our highways. Critics counter that the increasing number of electric and hybrid vehicles simply don’t consume enough fuel to generate their fair share in taxes. This argument rings hollow since there aren’t enough of these vehicles on the road to have a measurable impact on fuel tax collection. By most estimates, we are at least 10 to 15 years away from that point.

So why the big push to implement these unpopular, expensive and unnecessary vehicle tracking schemes? It comes down to money and control. The third party contractors who administer the programs seek profit form the vast amounts of data they can collect, and policymakers see an opportunity to further discourage an activity—driving—they view as undesirable.

A key question is whether or not Oregon lawmakers will consider any of this when deciding what to do with the failing VMT program. State law allows the program to continue indefinitely, unless lawmakers decide to end it or make it mandatory. If it becomes mandatory, Oregon will likely forget the carrot and move right to the stick.

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2 Responses to “The Carrot and the Stick Approach to Vehicle Tracking: What’s wrong with congestion pricing and Vehicle Miles Traveled Tax Schemes?”

  1. tzx4 says:

    ” Critics counter that the increasing number of electric and hybrid vehicles simply don’t consume enough fuel to generate their fair share in taxes.”

    It also adds a small incentive to buy such vehicles, a good thing.

  2. Tom McCarey says:

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