Getting rid of the gas tax

This sort of flew under the radar, but a few weeks ago a federal commission floated the idea of eventually replacing the gas tax with a tax based on the number of miles driven each year. What happened next was odd: progressives, conservatives, and wonks banded together to proclaim a mileage tax to be a stupid idea.

A mileage tax is not a stupid idea. It may prove to be unworkable for technical, political, or even cultural reasons, but at root a mileage tax is both a very good idea and also possibly a necessary one as we undertake a shift away from the internal combustion engine. It’s no surprise to see politicians (like Obama) run screaming from this proposal, but why are the pundits piling on?

Before delving into the specific arguments for and against a mileage tax, it’s worth noting that the entire country of Holland is doing exactly what commentators have deemed stupid or impossible: starting in 2011, the Netherlands will phase in a vehicle-tracking scheme that applies dynamic pricing to every mile driven. Pricing will vary by vehicle type, time of day, and location, in order to curb both congestion and carbon emissions. The program is designed to be revenue-neutral, and because the government is simultaneously phasing out a steep motor vehicle tax, the plan should end up reducing the burden on low-income drivers. I mention this not to suggest that the U.S. can or should do exactly as Holland does, but just to point out that the concept isn’t quite as crazily unworkable as some seem to think.

A lot of the objections to the mileage tax are narrowly technical and can be easily dismissed. For example, many have objected to the notion of taxing a Hummer on the same basis as a Prius. OK, then adjust the tax based on the fuel efficiency of the vehicle. Problem solved.

Other objections are a bit more high-minded, but still misguided. Matthew Yglesias makes an evidenceless assertion that a mileage tax would be inefficient because it doesn’t directly tax the things we want to reduce — namely, gasoline consumption and congestion. Again, this is a technical objection that hinges on the specific implementation of the mileage tax. It also ignores other externalities associated with driving, such as wear-and-tear on roads and land use changes (read: suburbia). Finally, it’s probably just wrong. Peak-hour congestion plummeted when gas prices shot up, for the obvious reason that vehicle miles traveled and congestion are tightly interlinked.

A final objection to the mileage tax is that tracking systems are Orwellian. And certainly there’s something to this. I tend to think that the privacy concerns can be addressed through technical safeguards (and I also think we vastly overestimate how much privacy we have in other areas of our lives), but this is a debate worth having.

Of course, the mileage tax proposal didn’t arise in a vacuum. As cars become more fuel-efficient and high gas prices decrease fuel consumption, states have started to run out of money for roads and infrastructure. In response to the revenue crisis, states (including Massachusetts, Rhode Island, North Carolina, and Oregon) are already beginning to experiment with mileage-based systems. These local experiments should absolutely be welcomed — by progressives, conservatives and wonks alike. Let’s see what works and what doesn’t.

Author Bio

adam

Comments Disabled

  1. Antony Hodgson - March 11, 2009

    In the article you linked to, the primary motivation for the mileage tax was the concern that as gas prices rose, people would switch to more fuel-efficient cars and the total revenues would drop. Since any switch to more fuel-efficient cars would be related to price rises, presumably the total revenue would be roughly constant, so I don’t see any major driver here (though I haven’t studied the question in detail, so can’t really say).
    However, I do think there’s huge merit in Pay As You Drive insurance and dynamic road access pricing – in effect, changing to a marginal pricing scheme to achieve a better relationship between prices and benefits, which will remove perverse incentives which increase driving and congestion. As you point out, there are no unsurmountable obstacles to this, so it should be done as soon as practical.

  2. Jonathan Slason - March 11, 2009

    Great article – and I would encourage you to read the specifics to Oregon’s VMT (vehicle miles traveled – http://www.oregon.gov/ODOT/HWY/RUFPP/docs/RUFPP_finalreport.pdf
    As you rightly note, many of the objections of the VMT tax can be sorted out quite easily.
    The sticking point of tracking where the mileage occurs is a large hurdle that needs to be discussed in conjunction with vehicle manufacturers.
    An additional note and point of significant contention is that because it discourages driving, and places a better reflection of the ‘true’ costs of living far away from your job perhaps to realize the ability to purchase a cheaper home – is that a VMT tax may become recessive and overly burden the lower income levels. Often those with lower incomes have to travel further to reach their point of employment. Not unlike many other systems for tax sensitivity – the VMT tax will have to be setup to provide a mechanism for income sensitivity. Either a base allotment, or a sliding scale of rates…
    As a practical matter, the implementation of a VMT tax should be phased in over time with the fuel tax. Both user fees (basically what they are) can be used to initially provide a net increase in transportation funding.

  3. Anna Olecka - March 11, 2009

    I beg to differ. First, the US solutions cannot mimic the European ones because our infrastructure is so different. Then, jumbling together two distinctly different goals (emission reduction and easing congestion) will likely result in achieving neither. Gasoline tax is tied to fuel consumption and as effective in reducing emissions as it can be. Replacing it with milage tax won’t improve it. Congestion is a function of urban design and public transportation. Consumers should not be penalize for the lack of effective infrastructure. Especially not in today’s reality where we must accept jobs that are available, regardless of distance it forces us to travel. Furthermore, the milage tax is not likely to accomplish the goal of lowering congestion because of lack of alternative solutions. Case in point…When I lived in Wilmington, DE I traveled to work 7.6 miles. But it took me 40-50 minutes because of the way the city of Wilmington and its suburbs are designed. I had no choice in the matter. The same was true when I lived in Boston: 8 miles, 45 minutes in stop and go traffic. Now, in Northern NJ (quite densely populated area, I might add), I travel to work 15 miles in under 30 minutes.

  4. Adam Stein - March 11, 2009

    Since any switch to more fuel-efficient cars would be related to price rises, presumably the total revenue would be roughly constant
    Three things about this:
    1) Gas taxes are constant per gallon, so a rise in the cost of fuel doesn’t increase tax revenue.
    2) Fuel efficiency gains are primarily driven by CAFE, not by fuel prices.
    3) We don’t really have to speculate. Gas tax revenue has dropped so low that states are scrambling for highway money.

  5. Todd Edelman, Green Idea Factory - March 11, 2009

    Electric cars – and plug-in hybrids depending on how they are charged – are out of the loop on fuel tax. It is absurd for energy for driving to be charged at the same rate for things like refrigeration of food or a computer and lighting which children use to study, but that is what happens when household current is used to charge those vehicles.
    Moreover, a considerable amount of this electricity comes from coal-burning plants.
    It is a simple fact that high taxes on fuel in Europe are used to support public transport and other things related to automobile driving, such as health care.
    Motorists in the USA are more than a little spoiled.

  6. Dan McDonouigh - March 11, 2009

    “OK, then adjust the tax based on the fuel efficiency of the vehicle. Problem solved.”
    See, my main objection to this tax model is that it fails to incentivize vehicle efficiency. The Big Three are obviously in deep trouble for any number of reasons, but they weren’t helped by high gas prices last summer, which caused sales of the least-efficient vehicles to plummet prior to the overall downturn in the auto market. To suggest that this can be solved by adjusting the tax based on fuel efficiency is to ignore the very real power of the lobby to render such legislation toothless–SUV tax credit, anyone? I can imagine legions of F150 drivers paying at the same rate as Corolla owners because of a back room handshake. Maybe I’m paranoid.
    Perhaps this problem could be overcome, not by basing the adjustment not on vehicle model, but on real-world data collected from individual vehicles at the time of purchase (miles driven since last fill-up divided by gallons purchased times an adjustment based on efficiency). But this measure, too, I fear, would be perceived as being a bit draconian. I’d hate to be the first guy to have his fuel efficiency data subpoenaed for the divorce hearing, for example.
    I think the best solution would be a use tax calculated annually by the vehicle inspector (a quick glance at the odometer is a lot less invasive) coupled with a gasoline tax that gets incrementally adjusted upwards to encourage efficiency.

  7. Robert Quaglia - March 11, 2009

    This is a terrible idea! It punishes those who have fuel efficient cars by charging them the same as gas guzzlers – taxed by the mile instead of by the gallon used. Who came up with this a Hummer owner???

  8. darooda - March 11, 2009

    I’m against the mileage tax, not just because of the 1984 implications, but more from an infrastructure standpoint. The gas tax is in place and can be easily raised if the goal is reducing fuel consumption. As far as road wear and tear I’m a proponent of toll roads, not the standard stop at a booth all the time roads, but an electronic FOB type device that senses the interstate and hwy miles accumulated. They’re both less invasive and would be cheaper to deploy.
    My counter point is of course that mileage taxes would be a better incentive local bicycling and walking. However, toll roads and gas tax will reduce the lion share of miles driven, without the slight to our independence, real or imagined.

  9. emat - March 11, 2009

    I am also not sure I understand the difference between a gas tax and a mileage tax adjusted for engine efficiency. Aren’t they basically the same thing? If I drive a hummer, I burn more fuel, hence pay more gas tax. If I drive a prius, although I drive more, I would be taxed less based on engine efficiency, very similar to how I would pay less taxes if there were a gas tax due to less consumption. To curb emissions I don’t think a mileage tax makes sense. To ease congestion, I might be convinced, but that would take some intense tracking infrastructure.

  10. Jeff Grim - March 11, 2009

    Why does it have to replace the gas tax?
    The gas tax should be lowered and targeted to pay for the externalities caused by gas consumption (air pollution) and targeted towards MSA’s and reduced in rural areas – this should be revenue neutral and pay for things such as Air Quality Conformity Determinations made by MPO’s and the CMAQ program.
    A per mile tax should be assessed to pay for road maintenance/snow plowing. Like #6 said, just use an annual number from your odometer submitted when your registration is due.
    All interstate highways should be tolled to pay for road maintenance/repair – you should be able to deduct these miles from the per mile tax using a receipt from EZ pass (like your income taxes).
    New roads and capital expenditures for public transportation should be paid from the general fund…paid for by all citizens not just drivers since everyone has access.
    Fares should increase for public transportation to reflect the true cost (yes I take a bus to work everyday). Parking costs should not be subsidized and reflect the true cost of parking. Congestion pricing should be implemented locally to help subsidize public transportation for low income users.

  11. Gregor Mittersinker - March 11, 2009

    Dear Terrapass
    I am surprised to see you jump on the tracking bandwagon.
    The policy of taxing fuel stems out of a convenient way to fund street and street related infrastructure investment. It was a easy way for the states to rely on revenue streams that are at least related to wear and tear on the roads.
    Diesel engines (aka heavy trucks that put a higher wear and tear on the built infrastructure) already have a fuel advantage as do hybrids.
    Good public policy would be to drastically increase the fuel tax (to european levels)so people who drive a lot or use gas guzzling SUV’s will look at alternatives (public transport – fuel efficient cars) AND add a distance tax to traded goods (based on where they are imported produced and shipped/sold). This will help local producers and will stimulate local production/trade.

  12. Anna Olecka - March 11, 2009

    Agreed. In the context of trading goods, the milage tax makes perfect sense. It will stimulate the right sectors of economy. In the context of individual consumption and infrastructure usage by consumers, the milage tax is pointless.

  13. Amanda - March 11, 2009

    Though I’m greener than green, I strongly feel that a mileage tax would prevent people from wanting to travel and see the country. As our cars and hopefully public transportation improve, people can travel farther on less energy. To cut down on useless wasting of energy AND time, it is simply wise for people to live close their jobs, but to put a tax on seeing your family or the nation you live in highly stiffles our desires to do so. Additionally, the US is so vast that it would be a shame to put a tax on a miles driven on a road trip, but a gas tax still makes sense… it just earns less money for the government. It tax money is really the concern, then increasing the gas tax would be more sensible before imposing a mileage tax.

  14. veeek - March 11, 2009

    -We already have a mileage tax in this country. We call it the “gas tax.” The more mileage you drive, and the more inefficient the car you drive, the more fuel you use. The more fuel you use, the more tax you pay. What could be simpler and more efficient?
    -In other words, the current system already does what the proposed system plans, and it does it far more efficiently and far, far more simply. I fail to see any advantage to the proposed system, and the article did not bring them out. Perhaps the problem with the current system includes the tendency of the government to grab the revenue, which was originally intended for infrastructure.
    -The mileage tax would charge a Hummer the same as a Prius. The article suggests “just adjusting the tax to the fuel efficiency of the vehicle.” Yeah, right. Who will determine the fuel efficiency and what standards will be used? Very controversial indeed.
    -Still, if states want to try it, great. That’s diversity and evolution.

  15. Chuck - March 11, 2009

    I drive an electric car, I pay no gas tax, I don’t buy gas.
    I get get 100 miles per 40 cents of electricity but I get that from my solar array so it’s free.
    So you pay for my roads!
    Get it?

  16. Carl - March 11, 2009

    Nice everyone… good to see not one of you note that it’s not “Holland” – It’s the Netherlands.
    Honestly, I don’t think a Hummer and Prius are the same and should be taxed the same… Also, to wire a country as large as the USA for this would require you to install it into cars, then people would hack the computers and we’d deal with that.
    Not workable in a country such as the USA.
    I’m not sure we should be discussing this tax but instead purchasing maps and helping the South Africans and Iraqi people find help to solve the great map problem in South Carolina with the Miss Teen’s. lol
    [Ed. — Is this what passes for humor in Holland?]

  17. Adam Stein - March 11, 2009

    This thread is…weird. I’m not sure why everyone is so hung up on the Prius/Hummer thing. As mentioned, this is trivially easy to address. Veeek, what’s controversial about assessing fuel efficiency? We already have two separate government agencies that do this.
    As for the assertion that a gas tax is simpler: agreed. The problem — noted right there at the top of the post — is that internal combustion engines are eventually going the way of the dodo.
    Methinks this warrants a follow-up post.

  18. Jane - March 11, 2009

    You pay your registration fee every year, right?
    Gas tax money should subsidize public transport. Even when gas prices were at their peak, in my city, it was cheaper to drive for a short trip than to take the bus. Hey, maybe we need a per-trip tax, not a mileage tax. (Ban free parking?)

  19. Anonymous - March 11, 2009

    Yes, I think many people are missing the point. Gas taxes aren’t *actually* there to incentivize fuel conservation. They were instituted to help pay for the roads.
    Read that again.
    They were instituted to help pay for the roads.
    The thinking at the time was that those who use the most gas, did the most driving, and thus should pay the most towards road maintenance. And it was easy to setup.
    Fast forward to say… 5-7 years in the future. If no mileage tax exists yet for all the misguided reasons above. Yet 50% of all cars on the road are either pure electric or hybrid, dropping fuel usage for transportation by say — 35% from today. This means that there are 35% less dollars to pay for roads.
    “You can raise the taxes as consumption drops” — you could. But as prices rise (due to fuel tax increases, or fuel price increases) more people will switch, causing more increases, which further drive people away from driving. The cycle spirals, and “wha-la” — 100% electric fleet, and 0 revenue. Because a $1000/gal tax (or $10000/gal) on 0 gal sold, is still $0 collected.
    So the question is “what do we replace the gas tax revenue with?” The answer has to be something — income tax increases? Mileage taxes? Sales taxes? Cuts in school budgets? The money has to come from somewhere. Mileage taxes are nice because they preserve the idea that the people who use the roads the most, pay the most taxes to help maintain them. All the “congestion benefits” etc are just window dressing. Nice ideas, but not really the point. The point is to continue to be able to pay for the roads.

  20. Amy - March 11, 2009

    I am for the mileage tax, and no, it is not that difficult to install. There are already cell phone towers everywhere, and satellites revolving the earth. The cars can be logged via frequency instead of installing wires everywhere.
    One major reason that Governments are looking more & more at the mileage tax, is because their revenue from sales tax, mortgage tax, business real estate tax, & other taxes have declined rapidly in this economy. As more people get laid off, government is desperate to find other ways to drum up revenue.
    I was very estatic and overjoyed when the price of gas rose to $5 a gallon. There were less cars on the road, people became conservative & actually carpooled, walked, or rode a bike.
    Now that gas has dropped drastically, people have gone back to their “nasty, selfish habits” of driving everywhere.
    I live in a condo complex. The school bus picks up the kids right at the entrance. The parents are beyond annoying all parking their SUV’s, & gas guzzlers right there at the narrow street (approx: 20 or more cars). The kids do not walk about 100 feet to the bus stop, because the parents will park there and have their cars running full blast for 20-40 minutes waiting for the school bus. (yes, elementary, middle, & high school). What is even more annoying is that as you drive past 87% off the streets in the towns & villages, you will find ALL of this recurring leading to HUGE amounts of damage to the environment. Not only do they do this in the morning, but the afternoon too! Most of the houses are within 12-25 feet of each school bus stop.
    Kids are now overweight & obese. Parents also have become overweight & morbidly obese. Parents need to get out of their vehicles & have their kids walk to the bus stop. If they are so concerned, they can wait there with their kids.
    Not only do the parents do this with their kids, they do it with each errand they do. if they go to a strip mall, they park, go into the store, go back to their car, then drive down to the middle of the strip mall & park again….just to go into the next store. One, it is damaging the environment, Two, using more mileage, Three, causing damage to their body by getting no exercise whatesoever.
    I am 100% for a mileage tax, because this country is into disposible this, that, & the other thing. People do not fix things, but go out and buy replacements immediately. Our country has turned into a disposable garbage dump.
    There are very few who conserve to an obsessive amount. Most people don’t even go half way.
    Our economy is designed as a disposable society, that is taught to upgrade or buy the latest & greatest device. Example: Cell Phones, Cars, MP3 players, stereo’s, surrond sound systems, vacuums, TV’s, bedding, Clothing (each season always has new styles designed with the intent of getting everyone to get rid of their old-out-of-date wardrobe to be “IN-STYLE”.
    This is also designed to keep the sales tax revenue rolling.
    I have rebelled. I am not buying any upgrades, replacements, or the latest styles. I refuse to be a disposable consumer. I am 100-2,000 percent for the mileage tax. Why, because of all the things I mentioned above. Another major reason. WEAR & TEAR. If you have a Hybrid car, or an Electric car that is wonderful.
    But think about one thing – The more you drive it (MILEAGE) the more useage, shortens the lifespan a whole lot faster on your vehicle leading to repairs & replacement of parts. Cars don’t last forever. At some point you will need to replace it. The environmental cost is still enormous (making the car, repairing the car, disposal of the car, replacing the car with a new car). Electric Cars & Hybrids also fall into this category.
    The Mileage tax should replace the gas tax. Not only for the environment, but also for the extreme decline in the health of the Residents of the United States.

  21. sven - March 11, 2009

    It’s not punishment, it’s equity. The major benefit of owning a hybrid vehicle is the reduced cost of gasoline (not to mention a little fresh air for mother earth!)It doesn’t mean you receive a “get out of jail” card for everything!
    Ownership doesn’t exempt one from their responsibility to contribute a fair amount to road maintenance and construction. And regardless of how much anyone may drive (or not) this cost is the responsibility of everyone. Let’s not forget that our roads also move goods and services that we buy and use, which impacts every American.

  22. Scott - March 11, 2009

    One difference b/w mileage tax & gas tax that does not seem to appear in prior comments:
    Driving behavior. Drivers who accelerate toward red lights, who don’t properly inflate their tires, who have dirty air filters, who don’t turn off their engines at stoplights, etc…. pay the same mileage tax that someone who does. With a gas tax, they pay more. The gas tax captures the CO2 externality more accurately.

  23. Rene LeBlanc - March 11, 2009

    When we lived in Italy during 1978-1981, we noted that gasoline taxes were very high, but the tax on diesel fuel much lower so as not to make truck transportation impractically expensive. To counter this, diesel vehicles had a relatively high annual tax (something like on or two thousand dollars (I forget)). For truckers who drove a hundred thousand miles in a year, this was a tolerable premium to pay, since the diesel fuel was only a little more than half the cost of gasoline. For owners of diesel cars, this annual tax compensated rather fairly for the tax break on diesel fuel.
    I find the idea of a mileage tax to be abhorrent, and I certainly hope we NEVER go there. When you start having to compute your mileage against the rated fuel consumption for each vehicle type, you are just trying to get back where you were with a simple per/gallon fuel tax. For owners of electric vehicles, this could be handled the same way the Italians handled the diesel vehicles.

  24. Andrea - March 11, 2009

    One thing a mileage tax can’t account for is the way people drive. An aggressive driver with 15K miles of high-speeds and hard acceleration uses much more fuel than someone who drives the speed limit and accelerates slowly – regardless of car type.

  25. G. Atcheson - March 11, 2009

    Mileage tax makes sense for revenue for road work, but the implementation has to be more sophisticated than simply checking the odometer every year:
    * not all states have yearly inspections
    * that is a HUGE tax blow all at one time
    * how do you account for travel outside the state? You may think it all washes out in the end, but the states are very jealous of their tax streams. Besides, places like New Jersey probably have a real complaint that there would be a huge number of commuters that enter their state without paying a mileage tax for the roads they drive on.

  26. Tom A - March 11, 2009

    We have a mileage tax. It’s called a gas tax. The more miles you drive, the more gas you use, the more tax you pay. Likewise, if you have an inefficient car, you use more gas hence pay more gas tax. Simple.
    If the revenue from the gas tax is the issue, then raise the existing tax on gas instead of implementing a complex new tax. I’m all for making gas more expensive (yes, I’m weird) because it changes people’s behaviors.

  27. Tom A - March 11, 2009

    Then perhaps we should make the tax on gas a percentage of the price, like most other sales taxes.

  28. Monty - March 11, 2009

    The KISS (keep it simple stupid) rule seems to apply to anything in taxes. Look at how well love the U.S. tax system is as an example. This mileage tax concept is simply too complicated and will be hated for that reason alone. Let’s find a way to do this with a gas tax and not develop an entirely new complicated tax system.

  29. G. Atcheson - March 11, 2009

    Why not both? Keep the gas tax to reduce emissions and add a mileage tax to pay for roads as we reduce gas usage. Then we don’t mind the Hummer and Prius have the same milage rate because roads and bridges cost about the same regardless of the efficiency of the vehicle.
    Hummers are probably a poor example here, because I believe they are already licensed at a different rate because they are so heavy they no longer qualify as a light truck. So their mileage rate would be higher because of their classification (like a delivery truck) because their weight causes more wear & tear to roads.

  30. Gordon C - March 11, 2009

    Gas tax and make it big
    Add $.25/gal (or $.50) per year for 10 years. Make it rev neutral, if necessary by giving lower class a cash refund to cover transportation costs.
    Force people to demand more efficient cars and trucks, and stop sending $$$$ to the middle east. (and other places that get corrupted by petro dollars.)
    It is easy.

  31. Todd Helmkamp - March 11, 2009

    I used to have a job 12 miles from my house. Then I got laid-off. Now I have a job 20 miles from my house. I drive an 03 Impala and regularly get 30 mpg because of the way I drive and how I take care of my car (air filter, proper tire inflation, etc).
    I get pretty hosed by all these people who are fortunate enough to live in an area with public transportation. Who live within walking or biking distance of their job. Some of us aren’t that fortunate. I’m supposed to leave the area in which I was raised and move closer to a job just because the infrastructure isn’t provided for me to get there without driving? Give me a break.
    I’m all for redesigning our communities, our vehicles and our lifestyles. But when I hear privileged (and by that I mean people who live where there is public transportation, etc) celebrate about high gas prices when I’m worrying how I’m going to afford to drive to work, I get pretty steamed.

  32. G. Atcheson - March 11, 2009

    Revenue neutral misses the point of the article that we have to pay for road work. An electric car needs a smooth road connected by sound bridges.

  33. Cliff - March 11, 2009

    It should be a MPG tax not a Mileage tax.. What if you drive a Yaris or Prius? You should pay less then if you drive a Suburban or Hummer.

  34. Joan Herold - March 11, 2009

    I would rather retain the tax on gasoline. With a mileage tax, if I have a small fuel efficient car, I may drive more miles – and pay more tax – than someone with a gas guzzler. In this case, being carbon conscious would actually cost me. And it the gas guzzlers we want to tax, and eliminate.

  35. Adam Stein - March 11, 2009

    Again: it would be easy to adjust a mileage tax to take into account fuel efficiency.
    And: a gas tax is fine — until cars don’t run on gasoline anymore. Then, not so fine.

  36. John - March 11, 2009

    The VMT won’t happen for most of the reasons posted here: too complicated, state-to-state issues, political quagmire, years to impliment, Orwellian, corruption, etc. However, increasing the gas tax, the simplest of practical solutions, has also been a politcal bomb. Does anybody remember how damaging Clinton’s effort was, which was the last seen in how many years?
    The only positive viewpoint of the VMT is to hold it up as an alternative to the gas tax. When compared, maybe raising the gas tax won’t seem so difficult?

  37. veeek - March 11, 2009

    -It’s also worth noting that the Netherlands is a small country with a much higher population density than the US (and incidentally a government which seems decent and trustable relative to ours).
    -I strongly suspect one incentive for this program is the problem of congestion in a densely populated area — it doesn’t matter what kind of vehicle you drive, if it is on the road, you are contributing to congestion, so reducing mileage is the solution. Reducing congestion and reducing energy consumption are two completely different goals, although they often overlap. The problem in the US is more related to total consumption, so a mileage tax would not make as much sense as in the Netherlands, and a consumption-based tax would seem more logical.

  38. Tom Harrison - March 11, 2009

    All of these arguments and responses together illustrate why a mileage tax is problematic. In short, it’s confusing.
    No doubt, if the installed monitor knew what kind of car it was on, and where that car drove, you have a single solution for:

    • Road use fee
    • Congestion pricing
    • Toll collection
    • Emissions measurement
    • And other monitoring

    This is a good thing, and surely it can be done. It’s complicated, of course. And it’s political.
    My complaint is that, as many others have pointed out, this whole idea arose primarily as a response by state DOTs as a mechanism for raising money to fix roads.
    To repeat: the current motivation for this is revenue to fix highways.
    If more revenue is needed because cars are getting more efficient or being used less, then raise the tax. Doing so accomplishes the goal, and reinforces any efficiency incentive. And everything needed to do that is in place already, understood by the users, strongly correlated to road use, and simple.
    As I have read more about this, it seems the main reason the mileage fee is being considered is that it doesn’t have the word “tax” in its name. In other words, it is politically expedient.
    To be sure, in the long run, a mileage-based fee structure makes sense for several reasons, the main one being that the technology required by the solution provides greater granularity — it’s easier to charge for and track each road user’s impact on wear and tear, congestion, emissions, and other factors.
    But simply as a way to raise money, it’s a silly dodge against raising the gas tax, which is far simpler, immediate, and what is needed now.
    Tom

  39. Jonathan Slason - March 11, 2009

    This is what some states already do. it is often hidden from view from most gasoline consumers so it doesn’t have the full effect of reducing consumption since those consumers just face a higher gasoline price all the time.
    I agree that probably the sales tax on a gallon of gas should be the first phase of a tiered roadway user fee system.
    The basics are: our roadways require money, they are a resource that took tax money to build, and now they must again take a proportation of tax money to operation and maintain. There are externalities as we all know from reading this blog and subsribing to this site that need to be accounted for as well – but that is solved by an a source point carbon levy.

  40. DeepThink - March 11, 2009

    Taxing Vehicle Miles Traveled
    All vehicles (cars, trucks, busses, motorcycles) on the roads today have recorders of vehicle miles traveled. These recorders are rugged, reliable and tamper-proof. They are called tires. You want to tax vehicle miles traveled? Tax tires.
    Now some people might tend to drive conservatively, within the speed limit, slowing down for curves, etc so as to get more mileage out of their tires, but think of this as a reward, like a charitable deduction on your income tax. Others may get less mileage by driving aggressively, speeding, cornering fast, etc. Think of this as sin tax. Tires on a Lincoln may not wear as well as those on a Ford Focus; think luxury tax. It all sort of makes sense, doesn

  41. Alex - March 11, 2009

    Isn’t a gas tax more efficient for the government to implement?
    1) The gas tax is already “adjusted” to the fuel efficiency of the vehicle so there is no need to argue about the tax per mile for the Hummer/Prius distinction.
    2) There is no need for either a tracking device (more plastic crap to be thrown away AND the “big brother” problem) or a government bureaucrat who checks the mileage of every vehicle (hope these guys are nicer than the schmucks at the DMV).
    As an earlier post mentioned, electric vehicles do not pay a gas tax, but is this really that good of an argument against the gas tax? It is not like there are THAT many electric cars out there. Therefore, this is simply another incentive for people to buy electric cars. I know that a lot of the electricity in this country is supplied via coal, but from my understanding electric cars are still cleaner per mile than those powered with a traditional internal combustion engine.

  42. RS - March 12, 2009

    And this is happening now? Seriously, what is the on-road fraction of purely-electric or plug-in hybrid vehicles, which don’t need gasoline?
    SUVs have been around for many years, and until electric vehicles form at least (arbitrarily picked) 25% of the on-road fleet, I don’t see the need to worry about a mileage tax.
    I haven’t seen results of how the mileage tax affects revenue vis-a-vis the gas tax, have you?
    Finally, again: mileage x fuel economy = fuel consumed, so (as many have pointed out) the gas tax *already* takes care of all that…

  43. Al B. Portland, OR - March 13, 2009

    A gasoline tax is simple, already accounts for fuel efficiency and miles traveled and doesn’t suffer from privacy issues. The only problem is that it is a unit based tax which creates issues for state revenue when prices soar. This can easily be addressed by making it a sales tax. Rather than taxing gasoline per gallon as is currently the case, tax it per net sale. This would insure that state revenues climb with prices to offset lower quantity used.
    The complexity of implementing a mileage tax will only result in politicians tweaking the system in the wrong direction. Can a good implementation of a mileage tax beat the current implementation of a gas tax? Yes, but the current implementation of the gas tax is already a sub-optimal one.
    When implementing policies, you don’t compare the best case scenarios, you compare the most likely scenarios. In that case, the gas tax wins every time.

  44. caregiver - March 20, 2009

    Now that I’ve slogged through 43 responses…
    I see no references to the people who drive for a living. What happens to the cab driver, the takeout food deliverer, the copy machine repair tech, the visiting nurse/aide in these scenarios?
    These people use their own vehicles for their jobs. Few of these type workers have a “fleet” vehicle at their disposal. Although the nurse may have a decent income to afford a fuel efficient vehicle, I can assure you that the aide, the repair tech and the takeout food deliverer cannot.
    A mileage tax would place quite a burden on the low-income, “on-the-road” workers, who would now be taxed to work.
    Suggestions anyone…Bueller?