Washington Post staff writer Tim Craig reports that the Virginia legislature is expected to repeal the law that authorized the voluntary tax on bad Virginia drivers. The action follows a Virgina Supreme Court decision issued on February 29 declaring unconstitutional the legislature’s other 2006 transportation policy innovation — the creation of unelected regional authorities with the power to levy taxes.
Craig’s article is something of a murder board — a dissection of what went wrong with the so-called abusive driver fee law, which we have characterized less pejoratively as a voluntary tax on particularly bad drivers who hold Virginia licenses. It’s a voluntary tax because no driver is compelled to commit any of the offenses that give rise to the fee, and it’s a tax on Virginians because it does not apply to out-of-state drivers. The Virgina Department of Motor Vehicles, which was charged with enforcing the law, has no leverage over them. The DMV could suspend the licenses of Virginia drivers who failed to pay the fee, but it had no authority over out-of-state drivers.
A variety of reasons are offered why this tax failed, including:
- To Del. Dave Albo, one of the architects of the law, the battle was lost over public relations. Bloggers railed against it as bad policy (or in the case of Neutral Source, exposed its inherent analytic contradictions here, here, and here). The lesson Albo reached: “You can’t fight the Internet.”
- Virginia already has “one of the most comprehensive reckless-driving statutes in the country.” Many more violations are defined as reckless driving in Virginia than in other states, and a conviction for reckless driving triggered these new and very high taxes.
- “Virginia lawyers, judges and police offers [sic] joined the public in rebelling against the fees. The courts and Department of Motor Vehicles quietly resisted them, in part because neither wanted to be responsible for collecting them.” According to Craig, “some police officers didn’t like their role in imposing the fees. A state report issued in December said reckless driving arrests had steadily declined since the fees had taken effect. The report speculated that police, out of sympathy for angry motorists, were writing fewer tickets for offenses that could trigger a fee.”
- Although the law was patterned after other states that had enacted similar programs, most notably New Jersey, Virginia legislators did not endeavor to find out how well these programs were actually working. “Albo modeled Virginia’s law after New Jersey’s, but he and others in the General Assembly were unaware of similar laws in Michigan and Texas, where judges are pushing for them to be repealed.” Information was provided to Virginia legislators suggesting that other states’ laws were failing, but they ignored it.
- Finally, advocates for the law failed to generate support among plausibly supportive interest groups. “[H]ighway safety advocates were hesitant to embrace the fines, which made it harder for [House Speaker William J.] Howell and [Governor Tim] Kaine to line up public support to counter the mounting public opposition on the Internet.”
Only this last item hints at the internal analytic inconsistencies that we highlighted. Highway safety advocates had good reason to believe that the law would not improve highway safety. The law’s purpose was to raise money for transportation projects, which it could do only if drivers did not change their behavior. It has not been credibly explained why highway safety advocates would want to support a controversial law that, by its very design and intent, would not improve highway safety. Yet for some reason, Virginia’s legislators and governor thought that these advocates, and the public, would not notice this obvious inconsistency.
As we reported on 21 Jul 2007 (internal hyperlinks omitted):
The Fauquier Times-Democrat quotes Governor Tim Kaine having argued in favor of the bill on public safety grounds:Both Houses agree on abuser fees. The dangerous behavior of unsafe drivers threatens the safety of other drivers and causes accidents that create congestion. Those drivers should be financially accountable for their actions.According to the Richmond Times-Dispatch, Kaine defends the bill because “[b]eing for driver safety is a good thing.” The safety theme is the justification provided by the Virginia DMV:Abusive driver fees have been under consideration by the General Assembly for three years. The goal of the fee is to promote traffic safety and other states who [sic] have adopted similar programs have seen improvements in overall driver safety.The supporting evidence for this claim is not provided.But the Times-Democrat editorial favoring the law quotes Kaine arguing for the bill because it would raise revenue for transportation projects, not reform driver behavior:Both houses agree that abusive drivers should pay stiffer fines to be used for transportation needs.In some cases, advocates of the law who acknowledge that its purpose is to raise revenue and not improve safety have relied on biased portrayals of revenue-raising alternatives they dislike. For example, John B. Townsend II, AAA Mid-Atlantic’s Manager of Public and Government Affairs, says that an equivalent gas tax increase “would cost every Virginia driver an average of at least $200 annually.” In 2005, there were 5,362,140 licensed drivers in Virginia. If Townsend’s average cost figure is correct, additional revenue from an increase in the gas tax would exceed $1 billion — not the $65-120 million that advocates of the new civil remedial fine law expect to collect. A gas tax sufficient to generate $100 million would cost drivers an average of $18 per year. (That figure is an overestimate; a nontrivial share of gas taxes are paid by out of state drivers.Townsend implicitly acknowledges that what made the law appealing is that it targeted a small subpopulation engaged in inappropriate conduct rather than the general population. “The new fees avoided that tax increase by only targeting the most unsafe drivers on our roadways.” House Delegate David Albo, the co-author of the legislation, has offered a similar defense: “We could charge everybody an extra 100 bucks a year or we could charge abusive drivers, the people who abuse the roads.” This comes close to claiming that drivers who commit the enumerated traffic violations are the reason why Virginia officials seek more money for transportation projects.
Note that improving highway safety is nowhere credibly argued as the purpose of the law. Irrespective of whether the tax is broad-based (that is, levied on all drivers) or only the subset who commit the worst traffic violations, the point of the law was to raise revenue. There never was a credible connection between the commission of serious traffic violations and the stated need for more or improved highways.
Thus, there is another highly plausible reason why the law went down to defeat, one that Craig does not mention in his story, possibly because he interviewed only Virginia politicians. A significant proportion of Virginia voters might have figured out that their elected officials were being deceptive in the way they promoted the law.
The centerpiece of the transportation initiatives that came out of the 2006 legislative session was the law permitting unelected regional boards to levy taxes to pay for regional transportation projects. On February 29, the Virginia Supreme Court declared this law unconstitutional because only the legislature, and not an unelected board, can levy taxes.
The taxes levied by the Northern Virginia Transportation Authority, and now terminated (PDF), were:
- Congestion Relief Fee (Grantor’s Tax)
- Motor Vehicle Rental Tax
- Transient Occupancy Tax
- Safety Inspection Fee
- Sales and Use Tax on Auto Repairs
- Regional Registration Fee
- Initial Vehicle Registration Fee
Only one of these taxes is correlated with highway usage, the single most important factor leading to congestion and the need for additional road maintenance and construction.
- The “Congestion Relief Fee” is a tax on real estate transactions, which have nothing to do with highway congestion.
- The “Motor Vehicle Rental Tax” and “Transient Occupancy Tax” are taxes on visitors. The former is arguably related to highway use, though it almost certainty exceeds by a large multiple the external costs actually imposed by car renters. The hotel and motel tax is mostly paid by nonresidents, who cannot vote in Virginia.
- The “Safety Inspection Fee” taxes an annual Virginia ritual in which vehicle owners pay service stations to obtain a sticker certifying that their vehicles are “safe” to operate. This inspection requirement applies to all vehicles — even those that are brand new for which a detectable safety defect is virtually impossible. Even if it is assumed that unsafe vehicles pose a greater burden on transportation infrastructure, this tax is levied on vehicles deemed to be safe.
- The “Sales and Use Tax on Auto Repairs” is, as it says, a tax on auto repairs. Like the other taxes, it has nothing to do with road congestion or the stated need for more highway construction and maintenance.
- The “Regional Registration Fee” and the “Initial Vehicle Registration Fee” are taxes on motor vehicle ownership, not use. They are proportional to the value of one’s vehicle, nor the costs vehicle use impose on either the public sector or other drivers in the form of congestion. The tax to title a $250,000 Rolls Royce purchased for a few recreational miles each year is $2,500, whereas the tax on a $10,000 economy car used to commute 100 miles per day is $100. (Annual registration fees also are scaled by vehicle value, not use.)
With the remotely possible exception of the car rental tax, all of these taxes are inequitable and inefficient. They are inequitable because they are imposed on persons who are not politically represented in Virginia, or they are imposed on goods, services or activities that are best uncorrelated with the stated need for transportation improvements. They are inefficient because they do not target the behavior that leads to demand for additional highway improvements. They actually subsidize highway users.
In this regard, these taxes are very similar to the so-called “abusive driver fees” that Virginia voters have soundly rejected on both equitable and efficiency grounds.
Alternatively, Virginia could decide to fund transportation improvements by taxing highway use. The higher the tax on highway use, the greater will be the reduction in usage and the more the demand for additional transportation infrastructure development will be attenuated. This can be accomplished easily by taxing fuel or vehicle miles traveled. Neither is a perfect policy, of course. The former inequitably and inefficiently penalizes those who own low-MPG vehicles. The burden vehicles impose on transportation is actually negatively correlated with energy efficiency, because high-MPG vehicles are driven more miles. The latter inequitably and inefficiently penalizes Virginia drivers whose miles are driven out of state, which has nothing to do with Virginia’s transportation needs. Nevertheless, both of these taxes are superior to taxing goods, services and activities that have nothing to do with transportation infrastructure usage.
Now that the Virginia legislature’s 2006 transportation initiatives have been overturned by the Supreme Court and the court of public opinion, will it decide instead to raise tax revenue in a manner that is roughly efficient and equitable?
This does not seem likely. The Northern Virginia Transportation Authority has asked (PDF) the legislature and governor to impose by state law the same inefficient and inequitable fees that were declared unconstitutional by the Supreme Court.