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OCR for page 77
Alternative Approaches to Heady Vehicle Taxation Applications Manual - Feasibility 9.0 Feasibility Feasibility is primarily a concern in the evaluation of new taxes but may also be a concern in the evaluation of increases in the rates at which existing taxes are imposed, particularly if the proposed increases are large. Feasibility addresses: the constitutionality of a tax that is new or significantly altered; the existence of the necessary technology and the availability of the necessary data to administer the tax; and the political acceptability of a new tax, of an increase in existing taxes or of Anv now technology proposed for administering a new or existing tax. O , , _ ., Evaluations of the feasibility of potential changes to a tax system are significantly influenced by the time available to legislate and unplement the changes. When this time period is short, the number of feasible options is small. As Me time Period lengthens. the number of feasible options grows. . . 1 , ~ t~ ~-_~ ~ ~ i_ Thus the feasibility criterion is applied differently when addressing an urgent need for increasing revenue from the way it is applied when performing a more ~n-depth study of potential improvements to the tax system. In any study of the potential changes to a system of taxes, the feasibility criterion plays a useful role in narrowing the options to be considered. Options that are completely infeasible (e.g., because of constitutional restrictions or the unavailability of needed data) should not be studied. However, for in-depth studies, some care should be used to make sure that this cnter~on is not applied rashly. Options that present feasibility challenges that are not absolute (e.g., implementation problems or political opposition) are not worth studying if they have no attractive features; but they may be worth at least some consideration if Hey do have potential advantages. For these options, the feasibility evaluation consists of identifying the effort that likely would be required to overcome the feasibility obstacles, and the broader evaluation consists of determining whether or not this effort appears to be worthwhile. One set of potential feasibility limitations consists of those that are technical in nature. If administration of a possible new tax would require technology or ciata that are unavailable or unreasonably expensive, there is little reason to perform a more detailed evaluation. If the cost of the technology or clata is less clear, then an initial step in the overall evaluation should be to learn more-about these issues and--to determine whether additional analysis is warranted. When it is, the information obtained in this preliminary step will be required for subsequent evaluation of administrative costs and, frequently, evasion potential. A second set of potential feasibility limitations consists of those that are political or legal. The most absolute of these are laws that are unlikely ever to be changed. An unportant example is the Interstate Commerce clause of the U.S. Constitution, which effectively Cambridge Systematics, Inc. 77

OCR for page 77
Alternative Approaches to Heady Vehicle Taxation Applications Manual - Feasibility prohibits discriminatory application of taxes to carriers based out of state. The class of relatively absolute limitations includes most or aU constitutional restrictions (both Federal and state) and may include some statutes (particularly Federal statutes). Many statutes, however) can be modified when there are strong reasons (and political support) for doing so. For example, some of We Federal restrictions on the implementation of tolls on the Interstate system were eliminated by the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA>, anymore are likely to be removed by the transportation bill that currently is pending before Congress. In general, an initial evaluation of the feasibility of adopting a new tax or increasing rates for an existing tax should consider Me sources and likely extent of opposition to the tax change and the prospects for overcoming this opposition. For those options that are subjected to additional analysis and found to be attractive on the basis of the other criteria, a more extended feasibility evaluation should consider the extent of any educational and lobbying effort Mat would be required to pass the necessary implementing legislation and the likelihood of success. 78 Cambridge Systematics, Inc.