A VMT tax of 4.4 cents per mile would internalize the external cost from collisions on average, but the external cost varies with the age of the driver. As shown in Table, the external cost of young drivers is over three times the external cost of middle-aged drivers. A precise VMT tax would have higher tax rates for the drivers with higher external cost. For example, the tax for young drivers would be 11 cents per mile, compared to 3.4 cents per mile for a middle-aged driver. Such a tax would reduce the miles driven by all drivers, but the reductions would be larger for young drivers, the group with the highest collision rates and externalcosts.

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THE EXTERNAL ACCIDENT COSTS FOR DIFFERENT VEHICLES AND DRIVER AGES Younger Than Age 25 Between the Ages of 25 and 70 Over Age 70 Cents per mile 3.4 5.4