• Apr 6th 2009 at 11:01AM
  • 42
Earlier this year, Transportation Secretary Ray LaHood briefly became an Internet comment piñata by suggesting the U.S. think about instituting a mileage tax. The idea went nowhere, but this doesn't mean that a mileage tax is unworkable anywhere. In fact, Oregon began considering a mileage tax at least as far back as 2001 and started working with 300 mileage tax-paying volunteers in 2006 (see this 2007 post and Oregon's 2007 PDF report for more). "Oregon's successful experiment with a mileage tax," as Adam Stein over at TerraPass calls it, provides a model for how a mileage tax can and should work.

Basically, by combining GPS units that tracks miles driven but only transmit the data to receivers at gas stations and instant tax calculation at the pump, Oregon managed to eliminate a lot of the worries that opponents have of a mileage tax. These include privacy issues and added complexity. Still, one of the biggest problems with a mileage tax - that fuel-efficient vehicles and gas guzzlers are treated equally, thereby eliminating at least one incentive for people to shift to vehicles that burn less fuel - remains, no matter how well the system works. What's more, participants in the program ended up driving less than a control group, so there were some environmental benefits. If you're in favor of charging taxes by the mile, take a look at how one state managed to implement the tax without offending the (self-selected) people paying the money.

[Source: TerraPass]
Photo by JeffWilcox. Licensed under Creative Commons license 2.0.

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    • 1 Second Ago
      • 6 Years Ago
      A gas tax makes a 16 mpg Hummer H3 owner pay just under twice as much as a 30 mpg Aveo owner in gas taxes while doing over 6 times as much damage to the roads. Essentially, it makes poor people subsidize driving for the rich. This is why using a gas tax to pay for the roads is bad.

      A mileage tax taking into account the axle weight of the vehicle avoids the regressive component of the gas tax. Yes, that's two taxes, but provided that the mileage tax is used to reduce the gas tax, it all works out nicely.

      The GPS privacy issue can be fixed (if it isn't already) by calculating the miles driven on Oregon roads and submitting only that single data point to the taxing authority, not every road driven on and when.
        • 6 Years Ago
        dhofmann, that's just what I was thinking. Multiply the mileage by some weight class factor so that heavier vehicles pay more to get a weighted (literally) mileage tax. And then charge a carbon tax that would be manifested as a gas tax for ICE cars, and an electricity tax for plug-ins. Scale both of them so that an average driver in a target-MPG car would pay about the same as they are now.
      • 6 Years Ago
      Just raise the gas tax. I know I would never volunteer to have the government put a GPS tracker in my vehicle. Besides, I know where to buy a GPS jammer. Odometer readings are easy to do, and anyways, disconnecting the speedo cable will probably result in you getting pulled over for speeding real quick. And they could also increase the fine for having a non-working speedo, enough where you wouldn't want to justify getting caught without it. The OBD tracks that stuff anyways, doesn't it?
      • 6 Years Ago
      I think it would make more sense to lower the gas tax so not all the road tax comes from fuel, and then have a small mileage tax for people that drive say over 12k (or some #) of miles per year. You're mileage could be checked at state inspections and then taxed accordingly. This would allow electric cars to still pay some road taxes.
      • 6 Years Ago
      This in effect rewards drivers of gas hogs, and punishes frugal vehicles.. Way to go Oregon! Leave it to you to use taxation to drive the wrong behavior!
      • 6 Years Ago
      If highway taxes are intended for road maintenance, why not impose a heavy tax on studded tires? They cause $millions road damage in Oregon every year.
      • 6 Years Ago
      I really hope they don't do this nation wide. What about older cars? Should I start driving my 6volt vw bus more just to not have to do this? Tea party anyone?
      • 6 Years Ago
      Fucking bastards! No new taxes! Stop making so many damn roads to nowhere and actually plan cities with more mass transportation. Fing bastards always have to milk the taxpayers for more pet projects to pay off people who got them elected.
      • 6 Years Ago
      What prevents someone from filling up with a gas can? Heavier vehicles tend to do more damage to roads. Does they pay a higher rate per mile? I can see so many ways people will get around a mileage tax.
      • 6 Years Ago
      Have fun with this.

      $87 / year is what I essentially pay for my 4000 miles/year and 22 mpg, with the current 24 cent gas tax.

      $48 / year is what I would pay under the same parameters, under a $0.012 mileage tax.

      (Yes, I really do average under 4,000 miles a year.)

      If I drive over 7500 miles / year, I will pay more under a mileage-based tax. Of course, I've always averaged under 7500 miles all my life, so I benefit from a mileage-based tax. But most everyone else will be paying significantly more, especially if they're driving a Prius.

        • 8 Months Ago
        Actually both your Math and your Reasoning is Broken.

        4000miles/22mpg*.24/gallon = ~$44 (Gas tax)
        4000 * .012 = $48 (GPS Tax)

        Loss under GPS tax $4.

        So no you don't come out ahead, you are near fleet average MPG so you pay a small increase. This makes sense because they will start out near revenue neutral.

        Second the benefit of one tax relative to the other has little to mileage driven as they are both mileage based taxes. The really beneficiaries are Hummer drivers as they will see their taxes drop. The real losers are small car/Hybrid/Diesel drivers that will see their taxes go up. That is why this is utterly boneheaded.

        Repeat for HUMMER:
        4000miles/12mpg*.24/gallon = $80(Gas tax)
        4000 * .012 = $48 (GPS Tax)

        Gain for Hummer drivers: $32

        Repeat for Prius:
        4000miles/48mpg*.24/gallon = ~$20 (Gas tax)
        4000 * .012 = $48 (GPS Tax)

        Loss for Prius Drivers: $28

        So basically with this change, gas/mileage taxes will be cut in half for Hummer drivers and double for Prius drivers. Government logic at work.

        Then sensible/sane thing is to simply raise gas taxes, then you automatically penalize heavier vehicles for the extra road damage, and you don't have to build an whole new collection infrastructure at every gas station in the state and every car! This proposal is so ridiculous it is mind boggling.

      • 6 Years Ago
      This whole milage tax idea isn't a bad one specifically, but the way the governments are going about it is.

      First, there's the issue of gas tax vs. mileage tax. If you have one, you shouldn't need the other, but that only works in a world of gas powered vehicles only, or electric vehicles only. I don't know what the gas tax is used for in the States, but here in Toronto, that money is (supposed to be) used for maintaining roadways. In a world with gas vehicles only, especially gas guzzlers, that model works fine because the money for road maintenance keeps coming in as people keep filling up their tanks. The more fuel efficient vehicles become though, or the more people use electric vehicles, the less money ends up going towards road maintenance.

      So a mileage tax, at least on electric vehicles, makes sense. Gas tax should still cover gas vehicles. The problem is how to implement a mileage tax properly and in a way that a loss of privacy won't be a concern.

      There are a couple of methods that could be used. The first would be the in car GPS method. That gets rid of the issue of people having to record how much they've driven, which means that, unless there's something wrong with the system, the mileage record is accurate every time. The problem with this method is that privacy may be an issue, because it would be constantly tracking where you're going. The benefit of this method would be that the government could better allocate maintenance resources based how much a particular road is driven on.

      Another method would be a mileage counter. Instead of GPS, mileage taxed cars could just have a meter that counts the mileage between charges, or at monthly intervals. With this method, there's no privacy issue, but no improved resource allocation.

      The real issue behind all of this is governments wasting money on poor maintenance methods. Exorbitant sums of money are spent on slow working, ineffective road crews who, for the most part, fill and refill potholes. Instead of wasting money, governments could be using something like the Pothole Killer - http://www.fixroad.com/.
      • 6 Years Ago
      This is a terrible idea. It combines Big Brother surveillance with a disincentive to use less fuel. Way to go, Oregon. A gas tax would've been much more productive and less intrusive. If revenues drop due to increased efficiency... then raise the tax, and encourage even *more* efficiency.
      • 6 Years Ago
      I don't belive if they go to the GPS System that they will drop the gas tax. You will get taxed by gas and milage? What a crock. And with using your odometer numbers for recording at inspection time. Well lets just say my old bus I can un screw the odometer cable as I am driving down the road very easily. So that won't work at all.
      Stick with the Gas tax like others have said. Already in place, the more you consume the more you pay. Then all you would have to do is get a better newer car or electric to lessen your tax burden. Not all people will get lower mpg car so there will still be tax money to the gov. I can just hear the Beatles singing TAX MAN!
      Taxes are part of any form of "civilized country" to pay for things like roads and police and such. But there is a point of too much at least on one thing before the people won't stand for it.
        • 6 Years Ago
        "You will get taxed by gas and milage? What a crock."

        The number of taxes isn't as important as the total dollar amount.
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