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Economics Research Institute Study Paper




Utah State University Department of Economics

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This study estimates the effectiveness of a vehicle miles traveled (VMT) tax in controlling mobile-source emissions of particulate matter (PM2.s) in a non-attainment area located in northern Utah. Using a recently updated household-level dataset, we find no evidence of an endogenous relationship between choice of vehicle type and VMT. We also estimate VMT elasticities with respect to cost per mile that are in some cases larger in magnitude than those reported in previous studies. Based on vehicle emissions tests performed by the Houston Advanced Research Center, we estimate the reduction in PM2.s emissions that would occur with two different sets of VMT tax rates. Principle findings are that a VMT tax rate of $0.003 per passenger car mile and $0.01 per light-duty truck mile (resulting in a mean annual tax burden of $128 per household in the first year) would reduce annual PM2.s emissions by between 7% and 11 %, depending upon the degree of heterogeneity in household driving behavior. At tax rates of $0.006 and $0.02 per mile for passenger cars and light-duty trucks, respectively (resulting in double the mean annual tax burden), annual PM2.s emissions would be reduced by between 12% and 23%. Both the advantages and limitations of the VMT tax are discussed.