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Dutch cabinet approves mileage tax

The Dutch cabinet has approved a plan for a GPS-based driving tax, to be set at an average of $0.07 per mile in 2012, rising over time. Motorists will be charged more for driving on heavily congested roads or at peak times. The proposal still requires parliamentary approval.

When I’ve written about mileage taxes in the past, I’ve been reliably informed that such schemes unfairly punish the virtuous drivers who own hybrids and other somewhat-less-polluting vehicles. But under the Dutch plan, gas guzzlers will pay a heavier tax. Also, the plan is expected to address several problems that all cars contribute to, regardless of fuel efficiency:

* Traffic fatalities are expected to drop by 7%
* Total traffic will drop by 15%
* Rush-hour traffic will drop by 50%
* Infrastructure costs should drop proportionately (Netherlands has some of the most heavily used roads in Europe)

It’s also been explained to me that such schemes are an intolerable burden on the poor. But the Dutch system is revenue neutral, entirely offset by the reduction of other transportation taxes. The elimination of a vehicle purchase tax will lower car prices by 25%. Road taxes totaling $900 per year for a mid-sized vehicle will also be eliminated. Public transport will be exempt from the mileage tax, and of course public transport — used disproportionately by the poor — will become more pleasant and more valuable when congestion is reduced. The plan’s authors expect that 60% of drivers will pay less under the new tax system than under the old. (Some complain that people who need to drive a lot for business will be unfairly punished by the new tax, although this criticism seems to me rest on a peculiar definition of the word “unfair.”)

Many tell me that a gasoline tax is a far simpler means of achieving the same ends. Of course, a gas tax doesn’t include congestion pricing. And as an increasing proportion of cars achieve very high gas mileage or replace gas tanks with batteries, gasoline taxes become a weaker lever over driver behavior. But fair enough: driving taxes will be harder to collect than gas taxes. The Dutch plan requires that the overhead of tax collection remain a small percentage of total revenue from the driving tax. It will be interesting to see whether this goal is met.

Finally, I’m warned that GPS-based systems that track drivers are a sign of incipient fascism. Privacy concerns are, of course, perfectly legitimate and appropriate, and the Dutch plan includes legal and technical protections to guard against abuse of the system. These protections may assuage you; they may not. Personally, I’m not sure why mileage taxes represent a bright line that we can’t cross, when we’ve already crossed several other such bright lines with our computer, phone, and financial networks, and I think that in general we really have no choice but to rely on legal and technical protections. But I grant that the issues involved are real.

Prediction: the Dutch system will work fine. Several other countries in Europe will adopt it in the middle of the decade. One or several U.S. states will then follow suit, perhaps prompted by the ongoing transportation funding crisis. In a decade or so, this sort of system will be widespread.

Related 1: an ever-shrinking proportion of U.S. roads are funded by user fees.

Related 2: U.S. Transportation Secretary Ray LaHood recently broached the idea of pegging the federal gasoline tax to inflation. The gas tax has remained static since 1993. Transportation infrastructure costs have risen at twice the pace of inflation. LaHood’s suggestion will be ignored. **Update**: the Dept. of Transportation wrote in to let me know the original story was misreported. LaHood simply said that an indexed gas tax is “something I believe Congress will debate,” rather than an option he explicitly endorses. The fact that the DOT is patrolling the blogosphere to tamp this story down says a lot about the political radioactivity of the gas tax.

Related 3: PG&E expects that it will be providing electricity for between 219,000 and 845,000 electric cars and plug-in hybrids by 2020. A rolling EV gathers no gas tax.

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