Virginia Governor Bob McDonnell wants his state to be the first to end the gas tax. The Antiplanner supports that idea because gas taxes are an imperfect user fee.
However, McDonnell proposes to replace the gas tax with a 0.8-cent sales tax that he says will generate more revenue than the gas tax. If your only goal is to make government bigger, then generating revenue is a good idea. However, if your goal is to have better roads, then even a gas tax makes more sense than a sales tax.
The key to the success of the free market is feedback. As imperfect as the gas tax is, it generates feedback to highway agencies: if they build roads no one uses, they get no gas taxes.
Sales taxes generate no feedback at all; the agencies get money whether anyone uses the roads or not. We know from the transit industry what happens when transportation agencies are funded out of general taxes. First, they build expensive monuments aimed at pleasing politicians rather than solving transportation problems. Second, they fail to maintain those monuments. That’s hardly a sound prescription for our highway system.
