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Thread: Should the gas tax be replaced with a mileage charge (interesting WSJ article)

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    Should the gas tax be replaced with a mileage charge (interesting WSJ article)

    I read an interesting article in the Wall Street Journal. I think others might be interested in it.

    Here's the gist:
    Cars get much, much better mileage than they did 30 years ago and are expected to get more fuel efficient as time goes on. The result? Gas taxes don't net as much money as they could/should/used to.

    Oregon just completed a trial of special electronic odometers and vehicle-mounted GPS units. The people who participated didn't pay the 24-cents-a-gallon state gasoline tax and instead paid a 1.2 cent fee for every mile driven. Minnesota has budgeted for a trial as well, and its likely to be tried elsewhere. The idea is that it would make automobile user fees more consistent.

    The link to the full article is here, and should be available for the next seven days (as a general rule, WSJ is subscribers only).

    I for one do NOT like the idea of a per mile tax. As vehicles become more fuel-efficient, we should just increase the gas tax to compensate and to ensure all road fees are paid for by road users. A gas tax is easier to administer, is generally a proxy for miles driven anyway, and acts as an incentive to drive smaller and more fuel-efficient vehicles. Since many of the negative externalities of driving come from fossil fuel combustion (trade deficits, foreign oil dependence, pollution, greenhouse effect, etc.) it seems reasonable to disincentivize BOTH fuel inefficiency AND excessive driving.

  2. #2
    While income for Da Guv'ment is good, I think that a gas tax can (and should) be considered incentive for greater environmental responsibility and less reliance on oil (foreign or domestic). I personally do not believe that if a fuel-thrifty hybrid sedan and a gas-guzzling F-950 SuperDuperDuty truck drive the same distance, they should pay the same amount. One of those vehicles has consumed much more fuel and output much greater emissions than the other. Increase the gas tax. If paying $3.00 per gallon was the shock we needed to start going "greener," than maybe $3.50 or $4.00 per gallon will really speed things along.

  3. #3
    Cyburbian DetroitPlanner's avatar
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    SP here is the rub, the number of vehicles forcasted to be higher milage hybrids is expected to increase quite a bit so Hybrids will become enough of the market where they impact revenues that come to repair and maintain the roads that they use. For example, a Prius will contribute considerably less revenue to occupy the same amount of roadway than a comparable Camary.

    This is complicated even further as products like E-85 only pay gas tax on the 15 percent of the product that is gasoline. CNG, Hydrogen, or Electric powered vehicles get a free ride under the current funding mechanism.

    Currently we are seeing declines in gasoline consumption but we still have the same network to pay for. In many areas you still have serious congestion and safety problems that need to be adressed. In addition gasoline taxes are a major source of revenue for the operation of transit in many parts of this country. We should not be in a position where our roads remain unsafe, pavement conditions worsen (causing higher repair costs to drivers, ask us who drive Michigan roads) and we cannot afford to provide transit to the elderly that need to get to the doctors or the poor that need to get to work.

    That being said, you can build into the per mile charge a penalty for those who choose to drive gas guzzlers. Now we should not award bad behavior, however we need to keep taxation equitable and reasonable.
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

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    Quote Originally posted by DetroitPlanner View post
    SP here is the rub, the number of vehicles forcasted to be higher milage hybrids is expected to increase quite a bit so Hybrids will become enough of the market where they impact revenues that come to repair and maintain the roads that they use.

    That being said, you can build into the per mile charge a penalty for those who choose to drive gas guzzlers. Now we should not award bad behavior, however we need to keep taxation equitable and reasonable.
    Yes, you're right that increasing fuel efficiency is leading to reduced revenues... but what about just substantially jacking up the gas tax? For example, both the state and federal rates should be doubled, and then pegged to inflation or the average fuel economy. It seems easier to implement.

    I hadn't thought about the impact of increased use of alternative fuel cars (which use no gas at all). Excellent point, DP. For now, I think it's reasonable to have gas guzzlers subsidize electric cars as an incentive to switch. But once they become a significant enough percentage of the nation's vehicle fleet, we'd have to implement a per mile charge like you suggest (varying depending on the cars gas mileage).

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    Cyburbian njm's avatar
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    This has been said before, but the only way a "mileage tax" would work is if it's imposed nationwide... otherwise crossing borders would create a bureaucratic nightmare... the proposed collection plan is for the "tax" to be collected at fueling stations, so purchasing fuel in one state when the majority of driving has been in another would mean that states would have to haggle over who gets paid what. Not that this doesn't happen already--I just think trying to collect based on distance would create a lot of discussion about interstate travel patterns and how states might have to compensate each other.
    What luck! A random assemblage of words never sounded less intelligent.

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    Cyburbian Brocktoon's avatar
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    Even though cars are getting more fuel efficient (2 mpg according to the article) than they were 20 years ago we as a nation drive more SUV and trucks whose mpg has remained static. From what I have read and hear the USís aggregate average mile per gallon has not changed in the past 20 years.

    States and the Feds have been dealing with the lack of funds for roads and highways for several years. If you look at most of the federal earmarks in Congress you will find many of them are transportation related.

    I see this article as little more than trying to create another argument on why an increase in fuel standards is not in the nationís best interest. The WSJ has printed several articles showing how the Big Three will be hurt by higher fuel standards and that CAF… standards are not the solution to our curb our fuel consumption.

    As for the per mile driven tax tried in Oregon it creates a disincentive to drive a more fuel efficient vehicle. If a car fuel economy was greater than 20 mpg then the 1.2 per mile charge would be more than the gas tax. Why drive a Civic that gets 38 mpg and pay a travel charge of 45 cents per gallon when you could drive a Suburban that gets 16 mpg and only pay 19 cents?
    "If you don't like change, you're going to like irrelevance even less" General Eric Shinseki

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    Cyburbian njm's avatar
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    maybe we should assess both?!?
    What luck! A random assemblage of words never sounded less intelligent.

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    But what do we need?

    But does everyone buy the spending demands coming from the states? The finance problem is premised on the suggestion that revenues don't match the needs but no one quesitons the demands. Certainly there is a lot of broken infrastructure and there are some capacity constraints that should be fixed. But if a private company was facing a looming budget crunch they'd first look at how to cut spending. I thought the Bridge to Nowhere would stimulate a conversation about wasteful transportation spending but all we're left with is counting miles in some states and selling off toll roads in others.

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    Cyburbian safege's avatar
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    Selling off toll roads are to get short term cash, because State and Federal funding are not available. It's a very bad business decision, but that is where we are today.

    As far as these tests, I don't believe any are using the radar/GPS combo that has been tested in Europe, and developed by Seimens last year. This would keep charges within the borders, and be sent as a monthly bill.

    As soon as they get the gas station hassle out of it, the idea will be quite simple.

    I thought Seattle was doing this too.
    Psychotics are consistently inconsistent. The essence of sanity is to be inconsistently inconsistent.
    -Larry Wall

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    Cyburbian jresta's avatar
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    The gas tax should be raised and it should be raised at regular, predictable intervals to adjust for inflation and for improving mpg.

    I don't drive much and when i do my location (and probably speed too) are usually tracked by the onboard computer my local carsharing org. runs to track usage. I don't think Harrisburg needs to know any of that.
    Indeed you can usually tell when the concepts of democracy and citizenship are weakening. There is an increase in the role of charity and in the worship of volunteerism. These represent the ťlite citizen's imitation of noblesse oblige; that is, of pretending to be aristocrats or oligarchs, as opposed to being citizens.

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    Cyburbian Coragus's avatar
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    Quote Originally posted by jresta View post
    The gas tax should be raised and it should be raised at regular, predictable intervals to adjust for inflation and for improving mpg.
    We're trying to raise our state gas tax in Michigan right now. It's one of the smallest gas taxes among all states. Adjusting taxes, even something as small as 3 cents per gallon for three years, is not easily done and it's not certain that it will pass.

    My Road Commission can show demonstrably that the gas tax is not a viable long term funding option as a stand alone option. It isn't just that cars are getting more economical and getting more miles per gallon than 20 years ago.

    The number of certified miles continues to increase, as do the costs of doing business. Equipment costs, asphalt costs, and insurance costs are hitting us, and for two years now, the gas tax income has FALLEN because people just aren't buying as much gasoline.

    Don't take away the gas tax, but give us local options too. As for that automatic system in Oregon, I'm still debating whether I like that or not.
    Maintaining enthusiasm in the face of crushing apathy.

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    Cyburbian mgk920's avatar
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    Quote Originally posted by Coragus View post
    We're trying to raise our state gas tax in Michigan right now. It's one of the smallest gas taxes among all states. Adjusting taxes, even something as small as 3 cents per gallon for three years, is not easily done and it's not certain that it will pass.

    My Road Commission can show demonstrably that the gas tax is not a viable long term funding option as a stand alone option. It isn't just that cars are getting more economical and getting more miles per gallon than 20 years ago.

    The number of certified miles continues to increase, as do the costs of doing business. Equipment costs, asphalt costs, and insurance costs are hitting us, and for two years now, the gas tax income has FALLEN because people just aren't buying as much gasoline.

    Don't take away the gas tax, but give us local options too. As for that automatic system in Oregon, I'm still debating whether I like that or not.
    The biggest problem with the current fuel tax in most states, IMHO, is that it is volume (cents/volume unit) based and thus unable to respond to inflation. Also, the current federal fuel tax has been unchanged since the late 1980s and now has a 'real value' take that is not even half of what it was when it was last adjusted.

    Has any consideration been given to converting to a percentage (cents/dollar of final sale) based fuel tax as a way of inflation neutralizing it?

    Mike

  13. #13
    Quote Originally posted by mgk920 View post
    The biggest problem with the current fuel tax in most states, IMHO, is that it is volume (cents/volume unit) based and thus unable to respond to inflation. Also, the current federal fuel tax has been unchanged since the late 1980s and now has a 'real value' take that is not even half of what it was when it was last adjusted.

    Has any consideration been given to converting to a percentage (cents/dollar of final sale) based fuel tax as a way of inflation neutralizing it?

    Mike
    You're right that the current tax is unable to respond to inflation, but I don't think switching over to a value-based tax would be ideal.

    Because gas prices fluctuate so rapidly but have relatively inelastic demand, a tax based on the price would yield a less consistent, reliable, and predictable stream of revenue than a tax on volume. Remember also that the price of gas has generally grown slower than the general rate of inflation and over many periods were declining in real dollars (see this chart).

    I think the gas tax should be pegged to a combination of inflation and average fuel economy, so that it automatically adjusts to compensate for changes in these factors. Of course, Coragus raises a valid point about the political reality. Even though we need to substantially raise the gas tax, it might not be possible.

  14. #14
    Cyburbian wahday's avatar
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    This is an interesting dilemma we find ourselves in, eh? In a way, I find the situation akin to taxing cigarettes to fund healthcare. When smoking declines, suddenly we would find ourselves lacking in resources to provide quality health services. So, by becoming healthier, we sacrifice the quality of care. Hmmm...doesn't make much sense, does it?

    When the interstate system was originally funded in the post-WWII years, the government used Department of Defense funds under the argument that these roadways would serve as evacuation routes in the event of military emergencies. Times have changed, but the question of how to maintain and fund new road building remains. Linking gas taxes with road building has become increasingly problematic as automobile use continues to have a detrimental impact on our world - not just in terms of air quality, but traffic, commuting, other environmental impacts, etc. As it stands, the more we drive, the more roads we get, so we drive more, so we build more, and on and on. At one time this may have made more sense, but I think most major metro areas are more concerned with reducing auto traffic than increasing it, even if it does mean a bigger transportation budget.

    I'm not saying I don't like roads, only that the model for building and maintaining is inherently problematic. I expect that we are going to see something like an increase in taxation of fuel to the point that the consumer burden, even with improved fuel efficiency, will remain similar to what it is today. Yeah, my car get s 55 mpg (not really, this is hypothetical), but with the taxes, I pay $4/gallon...
    The purpose of life is a life of purpose

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    Cyburbian ChevyChaseDC's avatar
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    Camary?

    Quote Originally posted by DetroitPlanner View post
    For example, a Prius will contribute considerably less revenue to occupy the same amount of roadway than a comparable Camary.
    Camary?? Did someone weld these two cars together? That would be the ultimate combination of Detroit muscle and Japanese sensibility!

    http://upload.wikimedia.org/wikipedi...roSS35-001.jpg

    http://upload.wikimedia.org/wikipedi...a_Camry_LE.jpg

    Last edited by NHPlanner; 29 May 2007 at 4:12 PM. Reason: leeched images replaced with urls

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    Cyburbian DetroitPlanner's avatar
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    Quote Originally posted by ChevyChaseDC View post
    Camary?? Did someone weld these two cars together? That would be the ultimate combination of Detroit muscle and Japanese sensibility!


    Give me a break, I'm from Detroit we don't have any of those cars here!
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

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    Carbon Trading

    This is why Carbon trading and tax would be better than a per mile or gas tax. The reason is that you're incentivised to drive less and consume less energy. It seems to me that increased driving even in fuel efficient cars still creates sprawl and other energy wasting land use patterns. This should be a major part of the discussion as well because the gas tax has been subsidizing land use patterns rather than looking at ways to save energy and resources.

  18. #18
    Cyburbian
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    This came up in a discussion of vehicle taxes in Oregon during my undergrad at PSU.
    They increased the taxes on hybrid cars, claiming that they weren't paying their share. Problem: Hybrid cars are much lighter than SUV's, and cause much less road damage. So they were not, in fact, causing more wear on the road than they were paying for. The analysis? More people own SUV's than Hybrids, so it's politically easier to jack the hybrid owners for money than the SUV riders.

  19. #19
    Quote Originally posted by The Overhead Wire View post
    This is why Carbon trading and tax would be better than a per mile or gas tax. The reason is that you're incentivised to drive less and consume less energy. It seems to me that increased driving even in fuel efficient cars still creates sprawl and other energy wasting land use patterns. This should be a major part of the discussion as well because the gas tax has been subsidizing land use patterns rather than looking at ways to save energy and resources.
    Overhead Wire, what do you mean by carbon trading for automobiles? Would each person be given an individual carbon quota? Or each car? And then there'd be some sort of market to exchange your automobile-carbon-allotment for cash? Since carbon emissions are directly proportional to fossil fuel burnt, that seems to do no more good than a straight up gas tax while imposing a lot of extra hassle. Or do you envision carbon trading as being imposed on auto manufacturers, or land developers, or some other large scale actors to try to reign in gas guzzlers and auto-oriented development?

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    Cyburbian DetroitPlanner's avatar
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    Quote Originally posted by JusticeZero View post
    Problem: Hybrid cars are much lighter than SUV's, and cause much less road damage. So they were not, in fact, causing more wear on the road than they were paying for. The analysis? More people own SUV's than Hybrids, so it's politically easier to jack the hybrid owners for money than the SUV riders.

    Hmm how about the Hybrid SUV products??? What size batteries do you suppose those things have in em?
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

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    I can't quite believe that the revenue generated by a mileage tax would offset the cost of monitoring mileage. It seems like a massive investment for an uncertain gain - an odometer for each car, the man-hours it takes to install them, and the time/equipment involved in reporting the results and enforcing payment? Yikes.

    I suppose the main question here is, is the point of the gas or mileage tax to generate revenue for road maintenance and construction, or to disincentivize driving an inefficient vehicle? If it's the first, then a mileage fee makes sense to tax drivers based on how much they use roads. But if it's the second, then a gas tax is more appropriate. Do you make the hybrid driver pay because he's tearing up the roads as much as everyone else, or do you make the SUV driver pay for his inefficiency even if he causes less wear & tear? I'm more inclined towards the second scenario...I like to the idea of incentives to consume less gas per mile, and I guess the gas tax is a de facto mileage tax on vehicles that get fewer miles per gallon. And encouraging drivers with a set number of miles (eg commercial drviers) to invest in a more economical fleet is a pretty nice idea too.

    Just thinking aloud, I don;t have any numbers to back me up...

  22. #22
    Cyburbian
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    II worry that the mileage tax may be regressive, considering land use practices. Particularly in urban settings, the cost of land and affordability of housing has driven folks to the suburbs or further to find affordable housing. Yet the jobs in some cases have not followed. So I wonder whether its fair to charge me more because I cannot affor to live closer in?

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    Cyburbian iamme's avatar
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    Quote Originally posted by gkmo62u View post
    II worry that the mileage tax may be regressive, considering land use practices. Particularly in urban settings, the cost of land and affordability of housing has driven folks to the suburbs or further to find affordable housing. Yet the jobs in some cases have not followed. So I wonder whether its fair to charge me more because I cannot affor to live closer in?
    Is it fair that someone farther out uses the roads more without paying because they want to save some money on their house?

    If government wants to help the poor, there are much better ways to offer assistance. Instead of giving subsidies of cheap and easy car travel, the government could help with health insurance instead.

  24. #24
    Cyburbian CJC's avatar
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    Quote Originally posted by gkmo62u View post
    II worry that the mileage tax may be regressive, considering land use practices. Particularly in urban settings, the cost of land and affordability of housing has driven folks to the suburbs or further to find affordable housing. Yet the jobs in some cases have not followed. So I wonder whether its fair to charge me more because I cannot affor to live closer in?
    You can afford to live closer in. You may not be able to afford to buy a detached single family house on the size lot that you want with the number of bedrooms and square feet, but if you can afford to drive miles and miles, you can afford to live closer in. It's all where your priorities lie, as well as what practices the government wants to encourage/subsidize. Right now, the government has decided to encourage cheap driving and the large lot/house sizes that accompany that.

    I can't afford to buy a house in the city I live in, but I can certainly afford to rent (especially since living in the city allows me to live without the hassles and costs of owning a car, and instead makes walking/biking/transit/car-sharing extremely attractive and easy). I don't have my own house, but I do have a ten minute commute by foot.

  25. #25
    Quote Originally posted by gkmo62u View post
    II worry that the mileage tax may be regressive, considering land use practices. Particularly in urban settings, the cost of land and affordability of housing has driven folks to the suburbs or further to find affordable housing. Yet the jobs in some cases have not followed. So I wonder whether its fair to charge me more because I cannot affor to live closer in?
    I too worry about the regressive nature of the gas tax. But I imagine that taxes on cigarettes, liquor, and lottery tickets are even more regressive. For me, he point of a gas tax is to (1) impose a user fee so that people pay in some rough proportion to the services they use and (2) try to capture and internalize some of the massive external costs of automobile travel.

    Just because someone is poor doesn't mean that they should have a license to pollute the air, take up land, and wear down roads without paying their share. The you believe, as I do, that the gas tax should be less about raising revenues and more about incentivizing behavior, then you have to accept that poor people need to pay it too. Of course, an increased gas tax could help the poor in the medium to long term if it leads to improved transit options, more compact development, etc.

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