Mileage tax replacing fuel tax

In My Humble Opinion
1

There was a thread a while ago in the Pit about California’s plan to get rid of the fuel tax, and tax people on the number of miles driven instead. There was just a segment about it on the CBS Evening News that said Oregon is trying it out. Rather than dredge up the Pit thread, I decided to start a new one because of the recent news story.

In a nutshell: Much of our infrastructure is paid for my fuel taxes (about 25% of the retail cost of the fuel we buy). Since fuel prices have climbed so high and so fast, people have been discovering – as they did in the 1970s – the benefits of fuel-efficient vehicles. With more people buying fuel-efficient cars, fewer dollars may or will reach state coffers. Thus, to make up the shortfall, state governments are thinking of getting rid of the fuel tax and charging people for the miles they drive instead.

The plan calls for cars to be fitted with a transponder, GPS or some other device that records the miles driven and reports them whenever the car is refueled. Privacy advocates believe this is an invasion of privacy. Mileage tax advocates say that it is necessary to be able to collect the data. They also say that they can keep track of people who drive during ‘rush hour’, and that those people might be charged a higher fee to discourage them from driving at those times.

Of course, a mileage tax would not discourage the purchase of high-profit, low-mileage vehicles like the fuel tax is doing – apparently to good effect.

Here’s where I get to the IMHO part.

I think that a mileage tax would disproportionately hit the poor, or at least the middle- and lower-middle classes. I think this because people of modest means tend not to live where they work. Let me clarify: I’m talking mostly about cities; for example, Los Angeles. In the 1980s housing prices seemed to be going insane. Many people moved up to Santa Clarita or the Antelope Valley because they could (at the time) buy a nice, new, three-bedroom house for little more than $100,000 or so. No way could they touch that in L.A. In exchange, they would have to commute an hour or so. (When I started working in L.A., I lived in Lancaster. It took me 1:15 to get to work, and longer on the way home.) In other words, people were trading time on the roads for a nice place to live. I could not afford a house in Bellingham, but I have a nice place a block from the beach in Birch Bay 22 miles away. A mileage tax would hurt me.

But there are others who commute. People who work in low-paying retail jobs probably don’t, for the most part, live in Cheviot Hills, Beverly Hills, etc. Since the L.A. subway system does not cover the whole city, getting around without a car can be problematic. (Cue Missing Persons.)

There are, of course, people who live in more rural areas. Commuting in rural areas can be pretty easy; but distances can be great. In Lancaster, dad had to commute nine miles to the airport where he worked. I commuted 34 miles to work at Edwards AFB. Rural areas are spread out. That’s why they’re rural. It may be a long drive to go to school or the market, compared to living in a big city. People living in rural areas would necessarily have to pay more mileage taxes than people who live in cities.

But it’s a fact that the roads must be maintained (reminds me of a story I read in Omni magazine about 20 years ago called The Roads Must Roll), and it takes money – taxes – to maintain them. If people are buying more fuel-efficient vehicles and paying less fuel tax, where will the money come from if not from a mileage tax?

How about raising fuel taxes? (Duh!) Raising fuel taxes would make up the revenue shortfall and encourage people to buy more efficient vehicles. More efficient vehicles would help stave off the day when we ‘run out of fuel’ (as the doomsayers say), and also result in less pollution.

Ah, but those poor sods in their SUVs! Hey, I drive an SUV (1999 Jeep Cherokee Sport, average 20 mpg). I have, as others will shortly pop in to say, needed my SUV. I’ve used it to tow my Willys. I’ve towed my motorcycles. I’ve towed heavily-laden trailers. I tow my boat. I’ve used it on off-road trails for recreation, and to carry my kayak for the same reason. I’m currently using it to haul a buttload of film gear, which I’m using more nowadays. Yes, I need mu SUV. But not as a daily driver. If I had the money, I’d buy a Mini, or a Civic or Prius Hybrid, for daily driving.

But there will still be some who insist on big V-8s and a 10,000 pound towing capacity. If they need it for recreational activities (towing a boat or travel trailer, for example) or household needs (carrying home improvement supplies, etc.) then they’re already including the cost of operation into their activities. I believe fuel taxes (or at least, fuel expenditures) are already deductable for businesses.

So raising fuel taxes instead of instituting a mileage tax would be more or less transparent to businesses. Recreational activities – and remember that I do tow my boat and buy gasoline for it – will cost a little more, but many or most of these activities aren’t entirely necessary.

In my opinion a higher fuel tax instead of a mileage tax would be more fair to more people, encourage people to buy more efficient automobiles (yes, and more efficient SUVs), and be better for the environment. (Telecommuting would be even better, but that’s a topic for another thread. :wink: )

2

Couldn’t a per-mile charge actually work in favor of the poor/middle class drivers? Just wondering as they’re less likely to buy the latest and greatest fuel-efficient vehicles and instead are driving the third-hand or older clunkers getting 10 MPG on a good day.

Ignoring that, driving more miles = consuming more gas. Will there really be a huge difference in whether drivers pay more at the pump for the miles they drive or get a bill in the mail after “big brother” reads off their transponder data?

OTOH, who’s really going to benefit are those who buy gas for stationary applications like generators, as well as lawnmowers/snow throwers since none of these use roads.

3

From what I remember observing in L.A., most of the ‘clunkers’ were Datsuns and Toyotas. Not great mileage, but better than 10 mpg. Still, there are a lot of commuters who have average-or-better incomes. They’d be hit harder than someone who can afford to live near his job. (Hence, the ‘middle- and lower-middle classes’ note.)

I have heard nothing about the rates or the amount of money generated one way or the other. But with a fuel tax, you have some control over how much you spend. With a mileage tax, you’d have to move house (which you may not be able to do, since housing in cities is so expensive).

The way I undertood the story on CBS, cars would have to be equipped to transmit their mileage. Lawnmowers and such wouldn’t. (No odometers.)

4

The roads, they must be paid for. The model used, for the most part, so far has been that those who use the most gasoline pay the most for the use of the roads. That model assumes some sort of gasoline usage/road usage equivalency, and I doubt that applies anymore.

And who drives the most fuel-efficent cars? Poorer drivers might drive older models that don’t do as well on mileage as newer models of the same genre, but their ten year old Hondas may well be turning in better mileage numbers than new BMWs and Monster-Dog SUVs.

So, I’m not convinced of either a.) the regressive argument that this penalizes the poor more than it does those better off, or that b.) it will somehow better fund highway expenses.

What does concern me is that it involves the government ever more intrusively tracking your activities.

Report to Mama?

5

In my admitedly unscientific (i.e., anecdotal) observations, people of lesser means (although not necessarily poor) live farther from their jobs than rich people. Unless, of course, you’re wealthy enough not to care, and can choose to live ‘in the country’. Most people aren’t rich. I’d wager that most people aren’t particularly ‘well off’. One of the reasons they buy fuel-efficient cars is to save money on fuel. Why? Because they have at least a little concern about how much they’re spending on gas. (Hey, I’m all for improving the environment; but the larger concern for me is the cost. I suspect this is ture for most people.) So a mileage tax would put most of the burden on people who are trying to save money. A higher fuel tax would encourage people to look for more fuel-efficient cars, so car makers would have the incentive to produce them.

Yes, as I said, the roads must be maintained. But let’s put the burden on the people who are using the most fuel. It would be better for the environment, and people would still be able to adjust their usage to some degree.

6

I think a milage tax is a terrible idea. It is, in essence, yet another subsidy of unnecessary consumption.

In addition, the idea of installing a transponder in every car on the road is silly. Why not just require people to report their odometer readings when they register their cars? Sure, some people will cheat, but the cost of cheating and audits to catch the cheaters can be made up by fines on the cheaters.

7

Who would pay for the installation of the transponder?
Who pays for the maintence? While there may be little maintence, what if there is a bad lot of them?

8

THis unquestionably hurts the lower classes, and the enviroment. Rich people can get a Hummer and tow a motorhome behind it, and only get taxed on miles. The poorer who might look for more efficient cars will not get as much benefit.

Also the poorer are the more likely to move further away from population centers for better quality of life for their families, and endure longer commutes. Now they are being penilized for this.

Bad idea, I hope it never sees the light of day.

9

This is one thing I thought of when I watched the segment. The news showed the testing that is happening in Oregon, and the car was equipped with a GPS. Then they showed a gas pump and an odometer and said that a device ‘attached to the odometer’ would communicate with a device in the gas pump. Can all cars be fitted with such a device?

But to answer your question: Virtually all aircraft are equipped with transponders. (Some are exempt, such as ultralights and aircraft not equipped with electrical systems, but are prohibited from operating within 30 nautical miles of a Class B airport without jumping through hoops.) Older aircraft had to have transponders installed at the owner’s expense. New aircraft come equipped with them already, and it’s part of the purchase price. Owners are responsible for maintenance.

Already being tested in Oregon, and under consideration in Oregon.

10

Prof. James Maule is a noted tax law professor. He wrote a short article about this on his blog last November 29.

While not sold on the idea, he does see some advantages. He likes the user fee element of it. Two days later (December 1, 2004), he responds to a reader who brings up the point about poor people living further from their jobs.

Its not the sort of article that will sway opinion but it is interesting.

11

The very idea of replacing an incredibly simple tax ($0.xx per gallon) with a massively complex, expensive to administer, tax is ridiculous on its face. The benefits to institution a mileage tax are tenuous at best.

Yes, the big gas guzzler pays more in gas tax than a small car, which would be equalized via mileage tax. However, that structure provides benefits to society, giving incentive for drivers to choose energy efficient vehicles. That benefit is thrown out the door with mileage.

Who gains, who loses, and how does society benefit by the switch to mileage? Drivers of gas guzzlers gain. Drivers of small efficient cars lose. (is that the message you want to send?) Society gets to pay millions of dollars to outfit every single car and gas pump with electronic tracking devices. If your device is broken, can you still get gas? What about non residents? Who pays to fix them if they’re damaged in an accident, or if they just break down? What do I pay when getting gas for my lawnmower? How about if I fill up, siphon the gas out into containers, drive 10 miles, then fill up again?

One of the worst ideas to come down the 'pike in recent memory.

12

Wouldn’t work. Let’s say you have a 20 gallon tank and you get 20 mpg. Let’s assume a ‘perfect system’ where you always fill the tank to capacity, and always refuel just as you have used exactly 20 gallons. When you refuel, your odometer device will report that you have driven 400 miles.

Now let’s say that you fill up your tank and also fill four 5 gallon jerry cans. You use the fuel in your tank, and then refuel with the jerry cans. When you go to refuel, your odometer device will report that you have driven 800 miles.

13

Good point. There still may be ways to play with the system, though that’s not the primary downside to this idea.

Thinking further, this also hurts people who regularly buy gas outside of the state, they get double dipped on taxes.

14

All car-related taxes are regressive and should simply disappear. Everybody benefits from highways and bridges, so toll just push that cost disproportionately onto the lowest income levels. There should just be one tax system in a state, based on ability to pay, the income tax for corporations and individuals.

15

So you want to penalize the people who use public transportation by charging them twice?

16

It’s a windfall for people with gas guzzlers. Say you drive 26 miles to work and get 13 mpg. Someone else drives the same distance and gets 26 mpg. He’s using twice as much gas, but will pay the same tax. There is no incentive to get a more efficient car, especially since the cost at the pump will go down.

Since gas is a finite resource, it’s just plain dumb to give incentives to make people use more of it.

17

Unless all 50 states adopt the same program, how does one address the inequities for out-of-state visitors? Then there’s that pesky issue in the US Constitution about full faith and credit among all the states, or something like that.

18

The solution seems simple. Put a fuel tax on top of a mileage tax.

For the sake of simplicity, let’s say an average car gets 20 mpg and the fuel tax in that state is 20 cents per gallon. That works out to 1 cent per mile.

So establish a road tax of 10 cents per mile. Meanwhile, cut the fuel tax to 10 cents per gallon.

The average driver of the average car pays the same. The driver of the more fuel efficient car gets a little break, while the driver of the less efficient car pays a little penalty.

19

Let’s see. I am forced to put a transponder in my car, so that my miles driven can be tracked in order to tax me.

Some smart city/state/federal employee figures “Hey, why are we spending money to put officers in patrol cars to check for speeders. We can just add a few more lines of code, and we will know how much you drive, and how fast”.

Then some smart insurance company employee figures “Hey, we can do the same thing, and start charging people based on how/when/how far they drive”.

Umm, no thanks. You really don’t need to be able to track my every movement.
Don’t even get me started on the idea of charging me the same taxes for my 30+mpg, light-weight, inexpensive car as my neighbor with the 10 mpg, extra-heavy duty, heated leather glove compartment truck.

20

:dubious: When has a tax ever been recalled in California? The govement moves them around sometimes, like Prop 13 did, I can;t think of a tax that’s been removed.