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Gotcha! States experiment with mileage tax


With cars getting increasingly better mileage and the popularity of hybrid electric vehicles growing, states are not producing enough through the gas tax to repair highways. So, MoneyWatch reports, some — Oregon Nevada, Washington, Minnesota and California – will be starting pilot programs that would tax you for the amount of miles you drive.

“It absolutely seems unfair to be looking for new ways to generate tax revenues as a reaction to cars becoming more fuel efficient,” says Karl Brauer, senior analyst at Kelley Blue Book.

But how would states calculate how many miles to tax you? Well, they could just tax you for the average number of miles a motorist travels per year in your state. Or — and this is the scary part — they could slap a GPS-like device on your vehicle to track your mileage (and that could follow every move you make).

Activists — from the Tea Party to the American Civil Liberties Union — have balked. And so have lawmakers from rural areas.

Oregon will begin the largest program in 2015, asking for 5,000 volunteers to pay 1.5-cents-per-mile instead of the 30 cents-per-gallon gas tax. Devices will report their mileage to the state, according to MoneyWatch.



  1. Tom says:

    There are two possible ways to do it. First, here in Pennsylvania when you renew your registration yearly, you must list the mileage on the renewal form. Secondly, when the vehicle is state inspected yearly, the mileage again is recorded. Therefore you have a system of checks and balances. But I’m sure there are other ways as well. It seems like a fair and equitable form of taxation. Those that drive less, such as seniors on a fixed income will pay less.

  2. Ben says:

    A mileage tax is not needed because the already-in-place gas tax is capable of almost perfectly taxing vehicles based on their usage of and wear to roads. Two aspects of any particular vehicle contribute to the wear and tear of our road system: vehicle weight and distances driven. Heavier vehicles cause more wear to roads than lighter vehicles. Likewise, vehicles that are driven more will contribute more wear to roads than vehicles that are only occasionally driven. The gas tax tracks these road wear factors perfectly because, in generaly, heavier vehicles use more gas than lighter vehicles and vehicles driven a lot use more gas than vehicles driven only occasionally. Thus, the gas tax almost perfectly captures and taxes the behaviors that contribute to road wear.

    In addition to being duplicative of the already-in-place gas tax, the mileage tax, without more, does not perfectly capture the behaviors that contribute to road wear. For example, the mileage tax on its own does not account for vehicle size. Thus, a Ford Fiesta driven 10,000 miles would incur the same mileage tax as a three-times-as-heavy Ford F150 pickup truck. Vehicle size could be incorporated by categorizing different makes and models of cars into different classes (e.g., compact, full size, light duty truck, etc.), but such classifications would be prone to error and fraud. For example, hypoothetically, an automaker may offer campaign contributions to elected officials to get their brand new full size sedan classified as a compact car for mileage tax purposes to make it more palatable to buyers.

    Instituting a mileage tax would also require layers of government bureacracy to monitor and collect the tax. Someone has to track all of the vehicles registered in the state, audit odometer readings, send out tax bills, etc. As mentioned above, such bureacracy invites fraud and manipulation. Also, this bureacracy adds an expense that reduces the revenue generated by such a mileage tax. By contrast, the already-in-place gas tax does not require any further increase in government bureacracy to operate – any increases in the gas tax should translate directly into revenue.

  3. Duffy Floyd says:

    OK….great. Given this is a state proposal….what about all the miles not driven in the state that is instituting the tax? You can’t just go by the mileage recorded at the time of registration. And I certainly am not in favor of a GPS tracking device being in my car. It is bad enough that the Event Data Recorders are installed in most all newer cars whose data can be used against you in the case of an accident.

    It is just another case of the Government essentially forcing a behavior on you (buying more fuel efficient cars) then complaining that by following their “guidance” results in an unintended consequence (lower gas tax revenues) forcing the people to pay for what amounts to THEIR mistake. There is no Constitutional Authority for the Federal Government to regulate fuel economy standards of vehicles.

  4. Bruce says:

    The problem with just using mileage on annual registration renewal or inspections is the car has travelled out of state, and if filled up there, gas tax was paid. The Oregon model is having a GPS system that only records miles driven in Oregon. If miles are driven in neighboring states, gas taxes are not collected. Someone who lives no the border of Oregon and Washington could buy gas in Oregon and pay 1.5 cents a mile in Oregon. If they work in Washington, they would drive gas tax free.

    We stress too much on the GPS type system and recording where a car is driven, as if big brother is watching. If the GPS is only for recording miles driven in state, it would be a good system. Hybrids and electric cars are using the road and not paying tax for it.

    I find it amazing that these same people complain about me, a bicyclist for using the roads and not paying taxes.

  5. Tom C says:

    In that example, replacing a 30 cent per gallon tax with a 1.5 cent per mile tax, the breakeven point is 20 miles per gallon. Most passenger car owners would be well above that efficiency number and would be disadvantaged. This is the intended consequence of the new tax. The proposal would however, reward drivers of large heavy vehicles which can’t achieve 20 mpg. The larger, and as Ben pointed out, more destructive the vehicle, the more savings available to the operator. It makes more sense to increase the gas tax.

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