Oregon’s successful mileage tax experimentPrototype system worked smoothly — and helped curb congestion
Recently I’ve been flogging the concept of a mileage tax, a system of per-mile road usage fees that over time can replace our dysfunctional gasoline tax as a way of funding transportation infrastructure. Although people have raised a lot of interesting objections, I’d like for now to skip ahead and simply describe Oregon’s successful experiment with a mileage tax. A single real-world example can be a lot more illuminating than an entire internet’s worth of abstract debate. Way back in 2001, Oregon recognized the problem that many state legislatures are now staring down: gas tax revenue is falling inexorably as vehicles become more fuel-efficient, threatening transportation budgets. The state launched a task force that investigated 28 alternative funding mechanisms before selecting a mileage tax as the one that best met a wide range of criteria: fairness, efficacy, ease of implementation, public acceptance, enforceability, privacy protection, etc. In 2006, the state recruited 299 volunteers for participation in a year-long trial of a prototype system. Because any real-world mileage tax will be phased in over a long period of time, it has to harmonize with the existing gas tax. The Oregon experiment neatly solved this problem with a pay-at-the-pump system:
The Oregon Department of Transportation (ODOT) has compiled a 100-page report on the experiment (pdf) that covers a lot of ground, but basically describes the trial as a roaring success. Note several features of this system:
Technically, the system worked. Just as importantly, public acceptance was high. 91% of test participants preferred the system to paying gas taxes. Obviously this was a self-selected group of people, but the broader public response was equally telling. Before the experiment began, media portrayals of the system were almost uniformly negative — and inaccurate. By the middle of 2006, media coverage ranged from neutral to positive, and were far more accurate. Citizen comment reflected this broader trend. ODOT concludes, “Effective communication can lead to public acceptance.” Perhaps most exciting from an environmental perspective are the ancillary benefits that such a system can provide. Halfway through the experiment, ODOT divided participants into two groups (plus a control group). One group paid a flat per-mile fee. The other paid a congestion fee of 10 cents per mile during peak driving times in the Portland metropolitan area. The congestion fee was separately itemized on participants’ fuel receipts. It turns out that all participants reduced their driving relative to the control group — a somewhat surprising finding, because the mileage tax was designed to be revenue neutral. Anecdotally, many participants reported changing their driving habits in response to the GPS mileage displays in their cars. “One person commented that she began walking to neighborhood places when she realized by looking at the display how short the distance from her home actually was. Other people said they began organizing short trips from home to consolidate to one trip.” The results among the congestion-fee group were even more dramatic. These participants dropped their peak hour driving by 22% compared to the control. And this group also reduced their total driving by more than the flat-fee group, indicating that they didn’t just shift their driving to other times. These results are preliminary, but suggestive. And they only scratch the surface of the possibilities opened up by a mileage-based pricing system. As the report notes, the system could provide a powerful tool to “metropolitan planning organizations (MPOs) looking for fair and stable means to fund regional plans, manage growth, contain air pollution and support better land use decisions.” Oregon currently faces a $10 billion dollar revenue shortfall for transportation financing. Earlier this year, the governor of Oregon called for state-wide implementation of a mileage tax. Comments
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Brilliant solution. It is timely. Why take so long to complete and publish the report? How would it work across state borders? Could it be replicated in other countries?
The idea that awareness of your consumption rates can make you cut consumption is confirmed by experiments on home electricity use.
All solutions of this kind depend on a high level of social integration and on trust that data are used according to strict and auditable rules.
If we have the time, this kind of approach has much to offer. Even if we don't, it is still worthwhile. It could become an element in a carbon rationing system
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I love the idea of people being more aware of their mileages. However, I would never, EVER endorse a plan in which a government places a GPS in my car. Who knows what other information they could collect with it? It would be all too easy for people in power to become corrupt--I could see this turning big brother, and quick.
I'd love better way to deal with the tax problem, but I also value my privacy very much, as well.
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by Jason on April 1, 2009 8:11 AM
I agree!
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by Jay on April 1, 2009 8:26 AM
Paranoid much?
As long as the GPS isn't connected to the internet I'm fine with it. It needs to have a wireless connection that is unique to gas stations and not wifi or wimax or cell-system or bluetooth (though bluetooth is so short range I wouldn't worry about it).
Your cell phone is a far more viable way for the government to track and spy on you if it want's to. And you are more likely to have that on you everywhere you go.. not just where you drive. Most of them have GPS in them, not that the gov't needs a GPS in a cell phone to locate you can they just triangulate (like the original iPhone did in its maps program before they added GPS).
I just wonder how long it'd be before people hacked the gps or cloned the signal to decrease their mileage reported at the pump.
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by Anonymous on April 1, 2009 10:26 AM
I think that the difference here is that the government does not require you to have a cell phone, but the government will require you to have the GPS in your car (at some point). I agree with other comments that the government has other ways in which to implement this type of a system.
My other problem is this- if the system is supposed to be "revenue neutral", then why are we switching systems? When you combine this with Adam's earlier statement that "gas tax revenues have been falling", it becomes clear that the system will probably not be revenue neutral very long once the system becomes entrenched. I feel that my fears are further supported by Adam's other comments concerning budget shortfalls, and how gas taxes are "too low" to change people's driving habits.
So yes Jay, maybe I am a little paranoid, but maybe that is only because I am paying attention... Like the old saw goes, "How can you tell when a politician is lying? Their lips are moving."
With that being said, I do agree that the main benefit to this system is the ability to tax people driving during peak congestion at higher rates.
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by Adam Stein on April 1, 2009 10:32 AM
The experiment was designed to be revenue neutral. I don't know what the target revenue will be for a full implementation, but presumably the idea is to fully fund the transportation budget.
Note, though, that revenue neutrality could make perfect sense. The problem with the gas tax is that the base is eroding. If the mileage tax just held things at current levels (or a bit higher) it would be a big improvement over the status quo. In general, the problem with transportation taxes is not that politicians raise them too high, but that they are constantly making them too low.
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I live in an isolated are and must drive 80 miles to the doctor, clothing, hardware, mechanic, etc. Does the milage tax have adjustments for rural folks who must make long drives to reach services?
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by GoodCheer on April 6, 2009 8:30 AM
Why should it? Because you have long distance to drive, you require more road-building and maintenance services than I do. Shouldn't you pay more?
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I must be missing something here. It sounds like a Prius driver and an SUV driver will be paying the same amount of tax if it is a mileage tax. Under the present gas tax system it seems to me there is an incentive to drive a vehicle that uses less gas. What am I missing?
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by Adam Stein on April 1, 2009 6:27 AM
Read the earlier posts. Long story short, the incentive people have to drive fuel efficient vehicles is called "the price of gas." Also, from a fairness standpoint, it's not really clear why Prius drivers should pay less for road maintenance.
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by Craig Laughlin on April 1, 2009 7:40 AM
Why should Prius drivers pay less for road maintenance? How about because they cause less wear and tear on the road than heavier gas guzzlers?
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by Adam Stein on April 1, 2009 7:58 AM
Not really. They also contribute to congestion just as much as a SUVs. I understand why everyone is exercised about this, but the fairness issue really seems somewhat overstated. Prius owners get a big discount on gas, and that's their just reward. The gas tax has always been too low to provide a meaningful incentive to conserve.
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by Monty on April 2, 2009 7:41 AM
Adam, you work for a company who sells carbon offsets based on the carbon use of your vehicle (among other things). If you commute 50 miles a day in a Prius versus an H2, the amount you pay will vary dramatically. But those carbon offsets are not required, and as a result only a very small percentage of people actually purchase them. Therefore, the only incentive to purchase a more fuel efficient vehicles are the price of petrol (which has a tax built into it). If we move to a mileage tax system you will lower that incentive even further.
The price of energy is too cheap, and we need to create a system that makes energy include the full cost of the use. Therefore, in my opinion, this concept is a bad one. I recognize that they could adjust the amount paid based on type of vehicle, but then we would be taking an already complicated system and making it more complicated.
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by Adam Stein on April 2, 2009 8:26 AM
Once more, with feeling: the gas tax does not effectively incentivize the purchase of fuel-efficient vehicles.
AAA estimates the all-in cost of driving at about $0.52 per mile, on average. Fuel itself makes up less than 20% of that cost, and gas taxes make up less than 4% of that cost. I'm a huge believer on the power of pricing, but very few people are basing their car-buying decisions on that 4%.
As an aside, why do people keep saying that adjusting a per mile fee to take into account fuel efficiency is complicated?
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by GoodCheer on April 6, 2009 8:44 AM
Adam: Check your facts. Damage to roadways goes up as the cube (3rd power) of axle loading.
If I in my Civic (500kg/axle) do 1 unit of damage to roadways, you in your H2 (1500kg/axle) do 9 units of damage to roadways.
So while the Hummer driver pays about 3x as much fuel tax as I do, even that is not sufficient to compensate for the damage done to the roadways. Reducing that to 1x is going in the wrong direction, not the right one. You claim that fuel tax is failing to promote efficient driving? What happened last summer?
And another thing: How much will it cost, per car, to install a GPS with a secure radio link to communicate to gas pumps. Maybe $200? For that $200 I could pay state and federal gas tax on about 20,000 miles worth of fuel.
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by Adam Stein on April 6, 2009 9:06 AM
GoodCheer -- I'm happy to hear some contrary data on this, but I'm still under the impression that road wear is not disproportionately caused by SUVs. See this, for example. Also, a lot of road wear and other infrastructure costs are simply age- and weather-related, and it seems most fair to amortize these costs on per-mile basis across all users. I wouldn't really say I'm opposed to tweaking mileage taxes according to other variables such as weight or fuel efficiency, but their importance does seem to be exaggerated.
Last summer, fuel prices rose and driving declined as a consequence. This had nothing to do with gas taxes, and underscores what I've been saying: gas taxes are too low relative to the price of gas to have much impact on consumer behavior, and the per-mile cost of gas taxes is going to drop over time.
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by GoodCheer on April 6, 2009 12:28 PM
Oops, sorry, I did my math wrong. 3^3 is 27, not 9. That was sloppy.
And of course you're right. A semi truck that weighs 25000kg on 5 axles will do 1000 units of damage (on the scale where my Civic does 1 and your Hummer does 27). I agree if you are arguing for truckers to pay the majority of upkeep costs on the highways they use, since they do the most damage. And I agree with the unnamed engineers you cited that many major roadways are built to take trucks BUT....
Many many roads were not. On them, the heaviest vehicles that use them are 8000# SUVs.
My point about last summer is that Americans are perfectly capable of responding to a price signal. If we taxed gas back up to $3.00/gal, think of how many other distortionary taxes could be removed. It would be a free market economist's wet dream.
Also, 'just' reducing vehicles miles traveled and congestion is great, but there are real costs associated with the use of gasoline... real direct costs in air quality (which leads to health costs, never mind quality of life), national security since oil producing states and terrorist producing states are two sets that overlap... shall I go on?
So my question to you is:
What is the purpose of this policy?
If you want to increase DOT funding, you're proposing doing it in a way that costs a huge amount of money and will take years just to break even. It makes no sense.
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by Adam Stein on April 6, 2009 1:20 PM
I've answered this question a few times now, but I'll give it another shot, about as concisely as I can muster:
In theory, gas taxes do a good job of addressing some of the externalities associated with driving. In practice, gas taxes have been relatively ineffective (in the United States), due to seemingly insurmountable political constraints on their use. Further, the efficacy of gas taxes is decreasing over time as vehicles become more fuel efficient. Finally, reliance on gas taxes is leading to budget crises in the near term.
In theory, mileage taxes do a good job of addressing many of the externalities associated with driving, including some that gas taxes don't: congestion, localized pollution, pedestrian safety, etc. In practice, we don't yet know how well mileage taxes will work, but early experiments suggest that they merit continued experimentation. Further, mileage taxes have the significant advantage that they remain effective even as automotive technology changes.
Note that there is a strong empirical element to policy design. The theoretical value of a gas tax is easy to grasp. Equally easy to grasp is the real-world failure of gas taxes along a number of important dimensions. I am advocating continued innovation of the sort exemplified by Oregon's experiment.
Note also that many -- not all, but many -- of the arguments being made against mileage taxes are flimsy. For example, you assert that mileage taxes will "cost a huge amount of money and take years to pay back," even though Oregon's experience is directly contrary. People seem eager to prejudge this useful idea.
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Dick, you are absolutely correct. The mileage-based taxation is regressive, compared to the very simple solution of increasing the tax rate for the fuel, which is really what we should be looking at. Complicating the equation serves no real purpose but to involve the government more in our personal lives. All that need be done to cure the "problem" is to increase the present gas tax to cover the shortfall of revenues. We don't need more intrusiveness, which involves more government employees to monitor the system. The proposal is illogical, wasteful and destructive of liberty. Sure would be nice if Oregon could stop trying to compete with their northern neighbor for the title of "Most Socialist State."
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by Adam Stein on April 1, 2009 7:03 AM
Hey, guess who else is experimenting with a mileage tax? Those communists in Texas.
Raising the gas tax would indeed be a simple solution to this problem. So simple, it almost makes one suspicious that there are some obstacles to doing so. Hm...
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Most states impose mandatory annual or bi-annual inspections, in which mileage is one input data point along with insurance information, etc. That is the opportunity for imposing fees, not tacked onto gas taxes somewhat arbitrarily. The concept of mileage-based taxation is fair, but the means for gathering that information (passively via GPS) is flawed and borderline unconstitutional, like Stephanie says, above.
There are other ways to impose "congestion-based" taxes, if necessary, but the purpose and scope of that porgram needs to be clearly defined and segregated from budget-gap-filling.
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If the Terrapass stated mission is to focus on our carbon footprint, how does a mileage-based tax square with that? What is the relationship between miles driven and carbon emitted? In short, it depends on what and how one drives. A mileage tax ignores that simple fact. Your position does not address that question. Neither have your replies to any of the comments so far. Clearly, Adam, your position is more about enhancement for the state(s) tax base as opposed to reducing the motorist's carbon footprint. That's what all these comments have been trying to tell you, but your replies so far are more defensive than insightful. Different and more intrusive taxes are NOT the answer, but increasing present taxes will probably be effective in reducing carbon footprint. Stick to the real issue and you probably won't get all the comments that you simply "don't get it".
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by Adam Stein on April 1, 2009 8:30 AM
What is the relationship between miles driven and carbon emitted?
Er...people who drive more emit more carbon? So taxing miles driven will reduce carbon emissions?
There's a somewhat surreal cast to this discussion. I have always been a proponent of higher gas taxes, and I continue to be a proponent of higher gas taxes. I'm on record all over this blog advocating for higher gas taxes.
But I also recognize the mountains of empirical evidence indicating that a) gas taxes in their present form are ineffective at encouraging efficiency, and b) politicians are completely unwilling to raise gas taxes even when facing budget crises, and c) advancements in automotive technology will unquestionably make gas taxes obsolete in the medium term. We can also add d) the preliminary evidence that congestion taxes, unlike gas taxes, actually do influence driver behavior.
These real-world considerations seem pretty compelling to me, and I haven't seen any comments that attempt to address them.
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I know people who won't even get an EZ-Pass because they are afraid that the government will use it to track them. This self-selected group that was used in the Oregon study loved it because they obviously are not the type of people who are worried about this sort of thing.
I fear that this particular system will encounter too much of this type of resistance if an attempt is made to take it national. Why not make it part of your annual tax filing. Allow self-reporting with spot-check audits.
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To agree that "people who drive more emit more carbon" would indeed make this an ecological discussion rather than political. There is a serious flaw in that twisted logic, however. Driving a Prius at 50 MPG, for instance, probably produces 1/10 the CO2 as a Sierra pickup at 20 MPG. Why should both vehicles be charged the same mileage tax? Your argument that such a tax works in Oregon begs the question of what environmental benefit is derived from a mileage tax? The short answer is: NONE. There is absolutely no benefit derived by the motorist.
The only benefit is to the states, who would enhance their tax revenues with such a scheme. Is this web page devoted to the environment, or to a political agenda? There is absolutely no benefit derived by the motorist or the environment. In fact, the environment could suffer. This scheme would be a disincentive to purchase fuel-efficient vehicles, inasmuch as their tax would be the same as that for a larger fuel hog that could be used for car pooling. You haven't addressed similar questions from readers of your blog, so I conclude that your mind is made up and you choose not to be swayed by the facts.
I don't subscribe to the Terrapass newsletter to read political blogs and I suspect there are a goodly number of environmentally-oriented readers who feel the same. For whom does the Oregon scheme work? Your article infers that it works for the state, but is curiously silent as to the benefits for the environment or the motorist.
A logical and sincere question may seem surreal to you, Adam, but that is generally a condition more accurately attributed to one with a closed mind. Please don't reply with personal attacks on the individual commenters. That only brings into question the logic of your own assumptions and doesn't answer their concerns.
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by Adam Stein on April 1, 2009 9:39 AM
In no particular order:
This is a political discussion. Most of the articles on this site are political in nature, because most environmental issues have a large political component.
I understand the math on fuel consumption. If you're concerned about this issue, there's a trivial fix: adjust the mileage tax based on EPA fuel efficiency ratings. I'm not overly concerned about this issue for reasons stated, but it is nevertheless easy to address.
The environmental benefit of mileage taxes are too numerous to list here, but they can be summarized briefly as: improved land use patterns, reduced congestion, improved local air quality, and reduced driving.
The absolutely enormous benefit to the driver is the continued maintenance and development of road infrastructure. Presently, basic infrastructure services are seriously threatened by budget shortfalls.
The absolutely enormous benefit to taxpayers more generally is that if budgetary shortfalls continue, road infrastructure will eventually be paid for out of general funds, which will both be unfair (non-users will subsidize drivers) and will increase budget pressure on other services, such as policing and schools.
Finally, to repeat: gas taxes have not, in the real world, done much to encourage fuel efficiency in the U.S. CAFE standards and high fuel prices have.
I think it's fine that we disagree on this issue, but I'm not sure what facts you're enlisting to your argument that I'm failing to address.
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by Howard fuller on April 1, 2009 10:28 AM
Thanks for finally clarifying that this is, indeed a political blog. That gives me the alternative to ignore it.
I can agree with some of your comments, but they seem to indicate that a whole new taxation scheme will be easier to accomplish that say, a large increase in the fuel taxes. This would enhance highway revenues to address the current shortfall (which is already fuel tax based. It would also directly encourage the use of smaller, fuel-efficient vehicle. We saw the proof of that last summer.
I think we can all agree that less dependence on imported oil is important for our national security. A high(er) fuel tax would directly work toward that goal, whereas a mileage tax would not directly do the same.
The point is that if the current fuel tax does not provide sufficient revenue for highway projects, is it not more reasonable to raise the fuel taxes, rather than establish an entirely new department of government to accomplish the same goal? Also, if this program were to be federalized, as it most certainly would have to be, the funds would be used mostly to support more government employees, with the environment seeing less than 10% of the benefit. Is that what we want? Surely, larger government is not the solution.
While you state that this experiment was successful, you do not state what the parameters were. How was sucess defined? It certainly couldn't have been from the cessation of congestion, as less than 400 vehicles were involved. They wouldn't have been a blip on the screen in downtown Portland during rush hour. Certainly, the test was intended only to determine if the government could successfully gather data it doesn't otherwise need, keeping the populace evermore under its thumb.
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by Augeus on April 1, 2009 10:40 AM
Further thoughts
1. This mileage tax is not a green measure in itself, at all. Indeed, unlike gasoline taxes, it fails to reward either economical mode of driving or fuel-efficient car use. However, it could be used for green purposes, such as congestion charging.
2. The mileage tax could also set by vehicle axle weight, which determines the vehicle’s wear and tear on roads, or, as you said, by EPA fuel efficiency standard.
3. Privacy could be better assured than in the pilot scheme.
• Instead of transmitting location and mileage data to a central databank, your car alone should hold the data. The data could be erased every time the tax is paid. Your credit card records would show no more data than they do now.
• Since the tax you pay would not be directly related to the gas you consume, it would seem unnecessary for the ODOT system to record the quantity of gas you purchase, except for statistical purposes.
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by Adam Stein on April 1, 2009 11:00 AM
Hi Augeus,
You're right that it's possible to design systems where no information at all gets sent to a central database. Basically, the module in the vehicle itself could compute the tax owed, based on the latest set of fare rules (which could be dynamically updated at the time of payment). You do end up with a tradeoff in customer service -- it's very hard to dispute charges if all the data is thrown away -- but it's certainly technically possibile to do this.
I'm not really sure why you say a mileage tax is not a green measure. It seems to me absolutely to be a green measure, congestion pricing or no. In the Oregon experiment, driving dropped compared to the control group, even for the people paying a flat per-mile fee.
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- How does a car using 20% as much gas emit 10% as much carbon?
- How can you separate politics and environmentalism?
- How does increasing the cost of driving result in no environmental benefit?
- A fuel-efficiency neutral tax such as this provides no incentive to purchase fuel-efficient vehicles, but it is not a DIS-incentive. There is a difference.
- Not every act of public policy needs to be centered around convincing drivers to purchase hybrids. This act would reduce the amount of miles driven by EVERYBODY.
- How do you manage to dress yourself in the mornings?
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I agree with Tom: what do we do about Oregonians (and other citizens as such a plan is implemented around the nation) who are located in areas that require lots of travel to reach jobs and services? How do we make this equitable for them?
I drive 60 miles a day to reach my job, and I live in the greater Portland area. This tight economy should be showing us all that living close to your work maybe laudable, but not very practical a lot of the time. Let's not forget that many people who live in rural areas provide the rest of us with necessary food and other goods. Are we going to pay more for those essentials as a mileage tax is passed on to the consumer? Do we really want to make things like food more expensive for all citizens? Seems rather regressive to me.
I agree that we have to do something about roads and infrastructure costs, but this may not be the most equitable solution.
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Helen, are you a farmer? If so, why do you live 60 miles from your farm? If not, then why are you grouping yourself in with farmers, who have no commute because they live at their job?
The problem is that gas tax revenues are falling and need to be made up. More gas taxes are already paid by people who live in rural areas because they use more gas. Now, more mileage taxes will be paid by people who live in rural areas because they drive more miles.
These types of taxes are intended to promote density. They promote density by providing financial incentives to moving closer to where you work. That means in order for it to have any effect, it MUST, by definition, be more expensive for people who live in the exurbs.
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I'm all for the mileage tax so long as a multiplier is used for the weight of the car because heavier vehicles cause more road wear than lighter cars. That solves the problem of high mileage cars being taxed the same as low mileage SUVs and helps encourage people to drive smaller cars. If the multiplier is not used, I'm against the program.
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Jesse, to answer your questions in order:
A car burning 20% the fuel of another can emit 10% the carbon with a more efficient combustion process and better treatment of the exhaust gases.
Environmentalism and politics are rather easily separated by those who value both. Otherwise, there would be no conservative conservationists. The fact that they exist should obviate your question. If I, like you, thought that political and environmental issues were inseparable, then I would ask why the Soviet Union was not the most environmentally friendly government the world has ever seen? We all know the mess they left in Eastern Europe and even worse, in Chernobyl. I would posit that conservation and politics have little to do with each other. By treating them separately, we may avoid alienating those who agree with us in one area, while opposing us in another.
Increasing the cost of driving in and of itself does not benefit the environment; it just makes everyone poorer. If that is the objective here, it stands a good chance of success.
I disagree that a mileage-neutral additional tax, as you describe this, is not a disincentive to operating more fuel-efficient vehicles. It raises the proportion of total taxes paid by those with fuel efficient vehicles. A larger vehicle is more attractive, based strictly on being able to carry a larger payload for the same tax/distance.
I doubt that such a mileage tax would reduce the miles driven by everybody. Some, like myself, already drive as little as we can. I don't know anyone, in fact, who goes out driving because it's cheap. It has nothing to do with hybrids, just logic.
I manage to dress myself every morning quite well, thanks, but that last remark inflicted some doubt on the validity of your entire point.
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by GoodCheer on April 7, 2009 7:16 AM
"A car burning 20% the fuel of another can emit 10% the carbon with a more efficient combustion process and better treatment of the exhaust gases."
Sorry, no. There are no nuclear reactions happening anywhere in your engine or exhaust system. If it enters the engine as carbon, it will exit the exhaust as carbon. It could be unburned hydrocarbons or it could be CO2, but it will be carbon.
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Don't tell me this is not a way for the government to track our living habits. Don't tell me that they have any business snooping into how many miles we drive. And also don't tell me they won't know our whereabouts if a scanner recording our mileage has a specific location. DUH!
The Iron Curtain fell when the government relaxed its control over the economy. Think about it.
Global warming is real and must be dealt with, as an emergency issue. I agree completely. But let's not be short-sighted about the effects of how things are regulated. We Americans are so used to our freedoms that we can't fathom what is to come given the government overstepping of the boundaries.
Another person posting here mentioned having to drive 80 miles just to get to the store or hospital: Really should such people be taxed for their necessary mileage? I agree with his point.
There are many ways to go to curb congestion and global warming. This "Solution" poses more problems than it solves.
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by Adam Stein on April 1, 2009 11:06 AM
People who drive 80 miles to get to the store are already taxed for their, um, "necessary" mileage. They have to buy gas, which is expensive, and they also currently have to pay a gas tax. I'm not really sure why subsidizing long commutes is suddenly a pressing priority.
I agree, though, that it would be neat to live in a world in which driving to the hospital was the most expensive part of our health care system.
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PS If the government poses a tax on our *lifestyle* (which is what this amounts to) what's next?
Do you know that California already proposed another such "Solution" for "emergency" situations which would have required Californians to purchase a remote-controlled heating device to their homes? That the State of California----ie Governor Schwartzenegger----would have controlled the heating of our homes via remote control, at the vague pronouncement of "Emergency" ? Do you know that they already are forcibly spraying private properties---that's private back yards----with pesticides never before tested on human beings, ignoring all complaints of ensuing illnesses and saying "nothing proves otherwise" than that the illnesses bear no connection to that spraying? Do you know that court orders have been issued to force such health-harming sprays through, all in the name of an "emergency" moth which according to the government of Australia poses no threat to crops? If they were really serious about eradicating an "emergency" moth, wouldn't they be spraying agricultural areas and not urban areas of human beings?
Repeat: If the government tracks our mileage, what's next? Think about it.
"Necessity is the plea for every infringement of human freedom. It is the argument of tyrants, it is the creed of slaves". ---Paul Revere the younger
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It is very interesting how the government can come up with so many ingenious ways to fleece their citizens out of tax dollars, but can not find a way to cut spending or balance their budgets. This punishes people who have to live in cheaper communities that are sometimes far from their jobs, or families with both parents working that have no way of living close to their jobs. The first way to meet government short falls should be to cut spending. Also, the government created these expressway systems specifically for people to drive. Why not spend money to develop fast and convenient public transportation systems before taxing citizenry for following the program that was laid out 50 years ago, namely to drive everywhere.
Just a side note. The major city close to where I live decided to add a fancy taxing system on parking meters. Guess what, people burn, tamper with, and demolish these meters and the streets are often deserted, meaning much lower tax revenue.
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by Adam Stein on April 1, 2009 11:36 AM
Just so I understand this: you want government to cut spending and develop fast and convenient public transportation systems?
I'm all for public transit, but it's pretty expensive to do right, particularly when transportation departments are facing budget shortfalls.
Another thing I'm all for: fancy taxing systems on parking meters.
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Wonder how some one with an electric car would feel about this?
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by Adam Stein on April 1, 2009 1:07 PM
Finally! I was wondering when someone was going to notice that the Oregon system doesn't handle all-electric vehicles.
The post was getting too long as it was, but, basically, alternative payment mechanisms would have to be set up for electric cars. For better or worse (mostly worse), it's going to be a while before all-electric cars make up a significant proportion of the fleet.
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A mileage tax, I would maintain, is greener than a fuel tax, if either:
1. The tax is set at a level that makes the car owner or driver pay more in mileage tax than he would have paid in fuel tax , or
2. The psychological effect is to make the driver more conscious, mile on mile, of the tax he pays, even if he pays no more tax in aggregate, and if it thus makes him moderate his car use.
A mileage tax is greener than a car tax or a car registration fee, because it is based on mileage and not on mere right to drive the car on the roads. The same would be true of car insurance, if it were charged by the mile.
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There is a better way; check it out at
http://transportation.nationaljournal.com/2009/02/should-a-mileage-tax-eventuall.php#1317472
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Adam, heavy vehicles tear up the road much more than the rest of us.
That is why SUVs should still pay more than lightweight cars(typically also more fuel efficient).
Why not have a weight tax?
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by Chad on April 1, 2009 6:41 PM
Weather tears up roads far more than heavy vehicles....so much so that you may as well ignore the effect of vehicles entirely. Most road repairs are ultimately rooted in corrosion, erosion and ice-induced cracking, not rubber vs asphalt.
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by Adam Stein on April 1, 2009 6:51 PM
Sure, it would be easy to vary the mileage tax this way. I personally am not convinced this is an important element of a successful policy, but it's certainly feasible.
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I guess my environmental credentials aren't what I thought they were. I think that this is a ludicrous idea. I'd love to see insurance based on miles driven (and how they were driven). But taxing miles rather than (or in addition to) gallons of gas does nothing to encourage people out of their 12 mpg SUVs.
Reading the comments, people are shooting off into all sorts of different fees and taxes. I think we should make it simple: increase the federal gas tax by a dime every four months for the next five years, or longer. Any faster and we'll risk both inflation and making the economic picture worse. I also think that something like London's congestion charge makes sense in urban areas plagued with congestion and pollution. Anything more becomes too complicated and will make the large majority of Americans (who do care about the environment) think environmentalists are a bunch of tree-hugging elitist wackos who don't understand the difficult (read rural poverty, among other things) lives people lead.
A gradually phased-in gas tax (rather than a mileage tax) will both discourage unnecessary driving (hopefully encouraging mass transit usage) and encourage people to drive more efficient cars. I think that's our answer.
As to the weight tax; I don't know how many states do this, but Michigan's annual registration fee is based in part on weight. It wouldn't be a bad idea to weigh weight more heavily, as long as some consideration is given to the poor people who are stuck driving a 30 year old 2-ton car 20 miles to the nearest store for a loaf of bread.
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Adam,
It appears that you view opposing comments that disagree with your stance as a challenge to a war of wits. You quote your statistics as though they were the absolute gospel. In fact, many people base their purchases on fuel mileage, despite your statistics as to costs. You are very selective as to what statistics you quote, as is GM when they say they have the most fuel efficient fleet. The fact is that most purchasers are not buying a fleet, but a single vehicle.
The proof that your statistics are invalid can be found in the sales numbers last summer, when gas prices spiked. Fuel efficient vehicles, including hybrids has record-setting sales, whereas SUV sales were in the toilet.
I think that your statistics will be viewed as less than reality by the readers who can think beyond simple statistical propaganda.
Funny how you say the Oregon mileage based tax study was successful, yet you didn't say what the measure of that success was. I assume that the only success was in the ability to impose an intrusive additional tax on the populace, while ignoring the fact that increasing the present fuel tax is far more logical and fair.
I know you stated that the fuel tax is too low, but raising it is much simpler and more effective than imposing the mileage tax that you flog, despite the shortcomings your readers attempted to point out. This is not a duel, Adam. You are not required to parry each thrust of the commenters. The overwhelming number of comments should give you pause, if you're really open to discussion.
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He didn't say that car buyers weren't influenced by mileage. He said they weren't influenced by the gas tax. There is a difference.
So arguing (as you and others have done) that mileage tax which doesn't take efficiency into account somehow influences whether or not people will buy a hybrid is inaccurate.
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by Howard fuller on April 2, 2009 10:19 AM
Jesse,
Neither I nor any other commenters that I'm aware of have made the argument that a mileage tax influences whether or not people will buy a hybrid. I have simply stated that people are influenced by fuel taxes when they purchase a vehicle. One need only to look at European auto sales and European fuel taxes to see the correlation. Then again, it appears that both you and Adam have your minds made up, so you don't want to be distracted by the facts. Perhaps if the blog were written all in CAPS, that would make the logic more appealing.
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Once more, with feeling: A gas tax DOES incentivise the purchase of fuel-efficient vehicles.
Unless you're just totally in denial, like Adam, look at the fuel cost in Europe due to high fuel taxes. Then look at the vehicles that Europeans purchase. That is the true picture, despite Adam's rhetoric to the contrary.
Facts are facts, Adam, but don't be swayed by them. Keep on spewing the party line. Perhaps your argument will be more believable if you use all CAPS in your replies.
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by Adam Stein on April 2, 2009 11:02 AM
As Jesse notes, I never claimed that people are indifferent to mileage when the buy a car. What I have claimed is that gas taxes are too low to make much difference on the margin. The price of *gas* matters quite a bit, and the taxes are fairly insignificant in comparison.
The European example illustrates the problem nicely. Gas prices in Europe are presently in the $6.00 per gallon range, and have gotten as high as $9.00 per gallon. Surcharges like this certainly do make a difference. The roughly $0.40 per gallon U.S. tax, on the other hand...
So why not simply jack up U.S. gas taxes to European rates? To answer that question, I refer you to the commenter above who was shouting about socialism.
Finally, if this is really the most important thing in the world, then just adjust the mileage tax based on the fuel efficiency of the car. The math isn't hard.
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by Phil on April 3, 2009 10:32 AM
In order to maintain the incentive to drive more efficient vehicles, I think you would need to keep the gas tax in addition to a mileage surcharge. That way, the person who buys more gas to drive 200 miles pays more than the person who buys less gas for the same number of miles driven.
How would you collect this mileage charge from drivers of all electric cars?
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by Adam Stein on April 3, 2009 10:41 AM
The report is pretty quiet on the issue of electric cars. It does mention that an alternative collection mechanism would be required for all-electrics, but it really just wasn't a focus of the study. I think the (somewhat sad) reality is that we are a long way from a time that electrics make up more than an a miniscule proportion of the fleet. And in the early years, maybe it's a good thing that electrics get out of the tax altogether.
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"Increasing the cost of driving in and of itself does not benefit the environment" says Howard Fuller.
What is your evidence for that statement? Clearly, increasing the cost of driving reduces the amount of driving, and that benefits the environment. There may be other pluses and minuses to consider, but you cannot dispute this basic truth.
My concern with the mileage tax as proposed by Adam Stein is that it is intended to boost the revenues of the highway departments, which, granted, have found themselves underfunded relying mainly on gas taxes.
However, it's vital to direct a significant portion those increased revenues to transit, to highway maintenance, and to efficiency measures such as traffic management, accident response, etc.
Otherwise, you may be decreasing the driving with one hand(thru the mileage tax), while increasing driving with the other hand (by financing road expansions).
And there is an equity issue here. I remember the story of a young teacher who complained that her school did not pay her enough to live close to the community in which she taught and now she was going to be punished further with higher taxes to drive to her school.
I agree that we should not subsidize long commutes, but you must recognize the fundamental unfairness facing this teacher. This is a case where environmentalism exacerbates the considerable economic inequality in our society. The solution here is to provide excellent, cheap transit -- and that takes money. That's where the mileage taxes should go.
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by Howard fuller on April 2, 2009 1:04 PM
What is YOUR evidence that increased cost decreases driving? My only point is that increasing cost is not a benefit to the public. Adam has not identified that. Insofar as an offsetting benefit (and it may well be less driving), has not been clearly identified, his statement that the experiment was successful is questionable. What, exactly, was the goal of the excercise? Without a defined goal, how does one measure success?
[Folks, please don't encourage Howie. He's chasing his own tail, and it's not a pretty sight.]
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I do not understand the basis for your question. Applying a tax to any actiity does not, in and of itself, provide a benefit to anyone except the taxing entity. Public benefit is only derived when the collected funds are used for projects or policies perceived as filling a public need.
Increasing the cost of any activity, such as driving, does not provide a benefit to the public unless the activity is somehow modified or diminished in a manner that also diminishes harmful environmental effects derived from driving, such as air pollution, traffic congestion or the need to fund other transportation projects.
Making driving more expensive is not a valid goal in and of itself in a free society. It should only be, at best, a means toward a goal or goals. There must be a countervaling public benefit for any taxation. Otherwise, taxation becomes an exercise in social engineering as opposed to a funding mechanism.
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Hello, Gee some very interesting comments. We are really looking at it at the end of the hose aren't we? Sorry to be a supply side guy, tax the barrel, tax the gallon refined. Again in 2008 Exxon-Mobil and Chevron made more profit than any corporation in the history of captialism. Oh, sure we can pass some of that to speculation; yet, the profit was still per barrel. If you get the money there per barrel and per ton of coal, the whole captialism system absorbes the tax. A new system on top of a system, with all the addition carbon to make it go, is the problem. Drinking to get drunk is just that.
thxs dm
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If anyone is reading this far... The problem with the "resounding success" of the Oregon study is that it was designed to be successful. How can a study be valid when it is conducted on 299 people willing to have GPS installed in their cars for the purpose of tax collection? A much more valid solution would have been to randomly pick 299 registered car owners, and then see their reaction, and analyze those results.
If I have time to read the report, I will, but from your summary, I can't understand how overhead is low, privacy is protected, and evasion is difficult. The overhead to install GPS receivers and wireless transmitters in ever car, wireless receivers at every pump, and servers to handle the database requirements (especially if further calculations on fuel efficiency are required), and maintenance to keep all this running, doesn't strike me as low. You said privacy was protected because the state only gets odometer information. Then why is a GPS receiver necessary? Just read the odometer information (most are electronic these days anyway). And evasion is difficult currently, when there is a gas tax to supplement- but if that goes away, and a GPS receiver is tampered with, how is that detected? Now we will have to have gas pumps (or electric charging stations) that won't work unless you're GPS reports that it is tamper free. Now I'm driving somewhere and my GPS breaks and I can't buy gas (or plug in to recharge).
And come on, one participant needed a GPS to realize how short distances were in her neighborhood? Who were these volunteers?
Conclusion: flawed study that was designed to be successful, unrealistic and complicated implementation, and unnecessary as there are alternate means to accomplish this goal. Such as: tolls, gas tax as a percentage of gas price and not a flat rate, holding governments accountable for spending.
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by Adam Stein on April 3, 2009 10:29 AM
Thank you for providing this conclusion. I can only imagine how much more insightful it would have been had you actually read the study.
Couple of comments:
- I'm not going to rehash all the cost analysis in the report. Suffice to say they looked at projected auditing costs, capital costs, overhead costs, etc., and found them to be a low percentage of revenue collected.
- The GPS was useful for the congestion pricing experiment and so that Oregon drivers wouldn't be charged for out-of-state miles.
- Is it really that hard to understand how the project could be successful? Pick a bunch of metrics -- user satisfaction, equipment uptime, effect on driver behavior, ease of administration -- measure those metrics, see whether the project succeeded.
- Raising minor fake implementation problems at this point is perhaps not the fairest way to assess whether or not the system has potential.
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Oregon already has required checkups every 2 years. Why not charge based off an odometer reading then instead of tracking where people go.
Once GPS is required in ever car, the government will be able to track you in your vehicle wherever you are. If the GPS device in your car knows where it is, then the satellites providing the GPS do as well. It's a very small step to store all that information.
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Wow. This is a criminally stupid system. A gps in my vehicle monitored by the state? Really? You're kidding right? Absolutly not. Calling this a success is like congradulating Hitler on a job well done.
Wow.
[Ed. -- Wow, indeed. A Godwin's Law violation in reference to a road toll system. You're kidding, right?]
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There is an obvious counter to the argument that gas taxes are ineffective: Europe. The results are obvious: their cars are more efficient, they use their cars less, the roads are far better maintained, etc, etc
I think that vehicles should be taxed, and liability insurance assessed by the vehicle's weight. I'm incensed that I pay the same rate for liability in my 2500 lb. Toyota as someone in a 6500 lb Escalade, even though its' proven that the owner of that porker is six times more likely to kill me, injure me, or damage my vehicle than the other way around. Small vehicle drivers have have subsidizing these pigs for to long. The mileage tax is yet another subsidy. As Senator Lloyd Bentsen said, it's feeding the wrong end of the horse.
[Ed. -- this obvious counter has been addressed many times over here. European gas taxes are politically impossible here. No one questions that they can work in theory. They don't work in practice.]
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An additional point:
One of the biggest complaints leveled against gas tax in this blog is that it falls as cars become more fuel efficient.
At the same time, one of the greatest benefits of mileage tax is that "It turns out that all participants reduced their driving relative to the control group".
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