Oregon mileage tax program shows how to do it right
Earlier this year, Transportation Secretary Ray LaHood briefly became an Internet comment piñata by suggesting the U.S. think about instituting a mileage tax. The idea went nowhere, but this doesn't mean that a mileage tax is unworkable anywhere. In fact, Oregon began considering a mileage tax at least as far back as 2001 and started working with 300 mileage tax-paying volunteers in 2006 (see this 2007 post and Oregon's 2007 PDF report for more). "Oregon's successful experiment with a mileage tax," as Adam Stein over at TerraPass calls it, provides a model for how a mileage tax can and should work.
Basically, by combining GPS units that tracks miles driven but only transmit the data to receivers at gas stations and instant tax calculation at the pump, Oregon managed to eliminate a lot of the worries that opponents have of a mileage tax. These include privacy issues and added complexity. Still, one of the biggest problems with a mileage tax - that fuel-efficient vehicles and gas guzzlers are treated equally, thereby eliminating at least one incentive for people to shift to vehicles that burn less fuel - remains, no matter how well the system works. What's more, participants in the program ended up driving less than a control group, so there were some environmental benefits. If you're in favor of charging taxes by the mile, take a look at how one state managed to implement the tax without offending the (self-selected) people paying the money.
[Source: TerraPass]
Photo by JeffWilcox. Licensed under Creative Commons license 2.0.
Reader Comments (Page 1 of 3)
vw junky 11:15AM (4/06/2009)
I really hope they don't do this nation wide. What about older cars? Should I start driving my 6volt vw bus more just to not have to do this? Tea party anyone?
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Julius 11:26AM (4/06/2009)
I wonder how Oregon tracks those who get gas outside of the state - or how it would account for that difference... I mean, if someone gets gas outside of the state and it doesn't "reset" the GPS machine, then how would you allocate the tax? Is that done over two tankfuls (or more)?
And I'm sure someone somewhere will be able to hack into a GPS receiver at some point. And if it isn't locked into a vehicle, then how would you determine cheating? I mean - swap a receiver that is for a car parked in a garage every time you need to fill up with the one you take across country.
And if this is really meant as a replacement of the gas tax, then I'm not sure how this will encourage better fuel economy... as you're already taxed outside of gasoline and that cost goes down, therefore you can drive "anything" with little financial incentive to go smaller.
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Nixon 1:54PM (4/06/2009)
I see a new product opportunity.
New! Valentine Lasar/Radar detector, now with GPS Jammer! Drive anywhere you want, and the Valentine GPS jammer hides where you have been!
They will make millions.
jharlan 11:27AM (4/06/2009)
This in effect rewards drivers of gas hogs, and punishes frugal vehicles.. Way to go Oregon! Leave it to you to use taxation to drive the wrong behavior!
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Richard in FLA 11:40AM (4/06/2009)
I have a better idea. Take some of the money they have, hire a review team and start slashing stupid programs that don't work. The review team will pay for itself with money that's saved. I'm quite tired of paying so many taxes. I mean what's my incentive to keep working if over half of my money goes to inefficient govt?
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Geo 11:42AM (4/06/2009)
If highway taxes are intended for road maintenance, why not impose a heavy tax on studded tires? They cause $millions road damage in Oregon every year.
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Jeff Grant 11:42AM (4/06/2009)
What prevents someone from filling up with a gas can? Heavier vehicles tend to do more damage to roads. Does they pay a higher rate per mile? I can see so many ways people will get around a mileage tax.
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Tim 11:44AM (4/06/2009)
"Oregon mileage tax program shows how to do it right?"
IF everyone wants their vehicle tracked via GPS. (privacy problem)
IF everyone wants the increased hardware expense of the GPS system (cost problem)
IF everyone believes that a milage tax is the best way to go (opinion problem)
and
IF everyone agrees with YOU, Sebastian. (Opinions vary...)
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Jeff Grant 11:50AM (4/06/2009)
I think it would make more sense to lower the gas tax so not all the road tax comes from fuel, and then have a small mileage tax for people that drive say over 12k (or some #) of miles per year. You're mileage could be checked at state inspections and then taxed accordingly. This would allow electric cars to still pay some road taxes.
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jharlan 11:55AM (4/06/2009)
Oregon is a backward state, and always has been.
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amyigibson 8:26PM (4/07/2009)
What an insulting thing to say about a very progressive state, thanks jharlan!
As an interested Oregonian, my simple solution to the problem of taxing gas hogs and frugal frogs the same is simply to tax by weight. No brainer.
harlanx6 9:12PM (4/07/2009)
As far as paying for wear and tear on the hiways, I think that is a good solution. As far as fuel economy and emissions, in the end the market will have it's say. The cost of oil extraction, transportation and refining has to rise. After all, it looks like there will be millions of Tata Nanos tearing around India like ants, burning gasoline.
jharlan 11:58AM (4/06/2009)
It is none of the government's business how many miles we drive or where we are going.
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Herm 12:29PM (4/06/2009)
of course it is, you are polluting the people's air and promoting terrorism.. there should be a tax on gasoline or diesel.. $5 a gallon at least... and 120% rebates on electric cars.
harlanx6 1:12PM (4/06/2009)
Is Gorr there with you?
Mike 12:11PM (4/06/2009)
Using GPS in this application will just piss off a lot of people, the privacy issues and it is just plain overkill. Keep it simple. PA and a lot of other states already have an annual inspection where they log the car's odometer...use that number!
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win39 12:36PM (4/06/2009)
This is the most bizarre and inept idea to come down the road since carpool lanes. If the goal is to generate tax revenues and to reduce mileage driven increasing the fuel tax is simple and effective. In addition, it has the added advantage of encouraging drivers to switch to more efficient transportation and the mechanism is already in place. The money spent setting up this Rube Goldberg tracking system could be used to buy up old polluting clunkers which would provide cleaner air and a stimulus to the auto industry. There is no way to do a mileage tax right.
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kballs 4:00PM (4/07/2009)
Yeah it's bogus... how can they increase revenue while decreasing driving (which decreases revenue)? Only by increasing the taxes from what they are now. This is bait and switch because it makes some people think they will pay less because "I only get taxed for what I use". Not only is that false (because of higher rate, you'd probably pay a little more for driving the same miles), but you already pay a road tax for how many miles you drive: gas tax!
I also question the cost of a GPS logging system (everything from the devices in the cars, readers in gas stations, data backhaul from gas stations, servers, databases, people)... it seems like you wouldn't break even on the cost for 1 vehicle for a long time (maybe not ever), let alone preserve the current tax revenue (unless they leave the current gas tax in place and ADD the per-mile tax, which is likely, and will cost the taxpayer a lot more).
By the time they have a system in place, there will be a lot of plug-in hybrids and EVs that don't burn any gas or only burn gas on long trips... so the EV drivers will never pay tax, and the plug-in hybrid drivers when they do finally fill up after 5000 miles of in-city EV driving will have a $500 gas bill for 10 gallons of gas.
montoym 7:45PM (4/07/2009)
quote from kballs:
- "By the time they have a system in place, there will be a lot of plug-in hybrids and EVs that don't burn any gas or only burn gas on long trips... so the EV drivers will never pay tax, and the plug-in hybrid drivers when they do finally fill up after 5000 miles of in-city EV driving will have a $500 gas bill for 10 gallons of gas." -
Those reasons are precisely why a system like this is being looked at for the future. While most people don't want a GPS unit strapped to their car for gov't tracking purposes(quite literally), there really aren't many other ways around it. Sure, a yearly inspection could log your mileage, but then you get a lump-sum bill rather than the ease of paying as you go, like the gas tax currently offers. Additionally, what happens if you sell a car or buy a new one during the year? Really adds in some extra bureaucracy when all you want to do is pay cash for a beater you bought off Craigslist.
Secondly, the gas tax is there to pay for road projects and repairs(though it often ends up in the general fund). So, it's supposed to be paid for by those who use the roads. This is the secondary reason for a mileage tax. That way, hybrids and electric cars(which use less or no fuel) will still be paying their fair share for the road maintenance since they are still using the roads. This is presuming that we won't be seeing any floating cars in the near future.
Goverment knows full well that as people drive more efficient vehicles, they will lose out on tax revenue and they "will" find ways to recover those funds one way or another.
win39 1:59PM (4/08/2009)
The explanation for maintaining road maintenance/alternative energy revenues is reasonable, but still the method seems inept. In the future it would be a simple matter to add a self reporting mileage block to registration renewal for determining the equivalent of fuel tax for reduced fuel use cars. Cars could be classed according to fuel use and road degradation and the encouraging of the purchase of low fuel use cars could be factored in to keep the tax hit significantly lower than the fuel tax for a gas hog. It could be a simple small table look up on the registration form itself. With computers that count mileage in most vehicles the moment of truth of selling the car in the future would discourage cheating on the self reporting. Simple. No significant new infrastructure. Problem solved with no surveillance.