Friday, February 1, 2013

MDOT Wants Vehicle Miles Traveled Tax

The Maryland Department of Transportation is seeking to implement a vehicle miles traveled tax (VMT) as part of its implementation of the 2009 Greenhouse Gas Reduction Act.

According to the agency’s 2012 draft implementation report for Maryland’s Climate Action Plan MDOT wants to  “establish a GHG emission-based road user fee (or VMT fee) statewide by 2020 in addition to existing motor fuel taxes. Both options would create additional revenue that could be used to fund transportation improvements and systems operations to help meet Maryland GHG reduction goals.”

The Greenhouse Gas Reduction Act commits Maryland to the unrealistic and conflicting goals of reducing GHG emissions to 25 percent of 2006 levels by 2020, and creating a net economic benefit to the state.  As mandated by the law, the Maryland Department of the Environment developed an implementation plan.  MDE tasked MDOT and other state agencies with certain GHG reduction goals.

Last week, Delegate Justin Ready (R-Carroll County) announced he would sponsor legislation prohibiting the Maryland Department of Transportation from implementing its proposed VMT.

The Greenhouse Gas Reduction Act and MDE’s proposed implementation plan emanated from the Maryland Commission on Climate Change’s Climate Action Plan.  The plan is a menu of taxes, fees, and mandates based on spurious economic modeling.

Governor O’Malley created the commission through executive order.  The Center for Climate Strategies managed the work of the commission.  The Town Creek Foundation, a multimillion-dollar environmental grant making organization, funded the Center for Climate Strategies, and the political lobbying for the Greenhouse Gas Reduction Act.

An independent peer-review by The Beacon Hill Institute of the CCS’ economic analysis found.
1. CCS failed to quantify benefits in a way that they can be meaningfully compared to costs;2. When estimating economic impacts, CCS often misinterpreted costs to be benefits;3. The estimates of costs left out important factors, causing CCS to understate the true costs of its recommendations…For policymakers, the CAP report offers no worthwhile guidance. The report fails to quantify the monetary benefits of reduced GHG emissions rendering its cost savings estimates implausible if not downright unbelievable. The faulty analysis contained in the CAP report leaves policymakers with no basis on which to judge the merits of the CAP report’s recommendations for action on the mitigation of GHG emissions.
The non-partisan Maryland Department of Legislative Services studied the commission’s recommendations and came to a similar conclusion.
However, despite a significant amount of research, considerable uncertainty remains over the ultimate economic impacts of such a policy. In addition, the choice and design of the specific mitigation programs implemented will affect the magnitude and distribution of GHG mitigation costs. Policies that are not incentive-based (i.e., command-and-control) and/or do not implement economy-wide regulations will be much more costly. The distribution of costs within the economy will depend on several key factors, including the energy- and carbon-intensity of energy consumed by each sector. In Maryland, the manufacturing sector will likely experience a greater amount of employment and output losses relative to the rest of the economy as a result of GHG reduction policies. However, policies that attempt to mitigate these losses and exempt the manufacturing sector will only increase the total cost of GHG mitigation and shift the burden to other economic sectors. Ultimately, the cost of GHG mitigation policies, even those imposed on businesses, will be borne by individuals.

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