Mileage Tax vs. Gasoline Tax
In Oregon, discussions regarding movement from the gasoline tax to a mileage tax are gaining national attention. Previously, the gasoline tax has been the predominant method of taxing the distance (road usage) that an individual travels (consumes). An ideal tax usually charges individuals with fees based (as accurately as possible) on the goods and/or services that they consume.
As technology advances, drivers are getting more mileage out of less gasoline. This increase in fuel efficiency is likely to cause a decrease in the efficacy of the gasoline tax. In other words, hybrid cars/SUVs and smart cars (fully electric cars are completely exempt from the tax) would be driving the same distance but providing less tax revenue, even though they necessitate the same — and possibly increasing — amount of upkeep and expansion to be provided by each state’s department of transportation.
The mileage tax is one possible answer for those voicing concern about financial sustainability within the transportation sector. Oregon’s tax alteration is intended to offset the increasing unfairness of the gasoline tax, as “green” technology causes revenue collections to decrease. Those using electric cars should not be exempt from paying a tax that funds road maintenance while they are still receiving the benefits associated with using public roadways (strictly looking at infrastructure upkeep, disregarding environmental externalities).
Opposition to the mileage tax stems largely from concerns about reduced privacy, because the GPS technology used to track mileage could, theoretically, track vehicle movements. Yet, to reassure those wary of having GPS tracking devices installed in their vehicles, the Oregon Department of Transportation stated that “[ODOT] would have no involvement in developing the on-vehicle devices, installing them in vehicles, maintaining them or having any other access to them except, perhaps, in situations involving tampering or similar fee evasion activities.” This, in turn, raises questions as to the security of the “on-vehicle device.”
If implemented correctly, the mileage tax has the potential to more accurately tax those who use roads on the basis of frequency, and to spread the burden of the tax more equally. However, potential drawbacks to this system should also be carefully weighed. Some of these issues are addressed in the Show-Me Institute’s two transportation-focused policy studies, “Private Provision of Highways: Economic Issues” and “Missouri’s Changing Transportation Paradigm.”