This paper studies analytically a tax reform where federal gasoline and car taxes are replaced by tolls decided by local authorities. This is particularly relevant in countries with high gasoline taxes like the EU or countries that introduce gasoline taxes like China. One of the major barriers in the reform is the allocation of revenues: when the goal of the federal government is to keep the gasoline tax revenue constant, a vertical tax conflict reduces the efficiency gains of the new instruments. Another barrier is the presence of spillovers: it elicits tax-exporting behavior by regional governments and the high taxes overly discourage traffic. We find the efficiency loss of the first barrier to be small and spillover inefficiency to be larger. When infrastructure capacity is flexible, the spillover inefficiency tends to be larger if pricing and capacity decisions are decentralized and smaller if only pricing or capacity decisions are decentralized.