Ray LaHood Is Talking Transportation Taxes
- Posted by: Morgan Clendaniel
- on February 20, 2009 at 11:42 am
Right now, our driving is taxed with extra cost attached to the price of gasoline. You need gas to drive, so you pay the government some for it, and they get money in exchange for you driving. But new Transportation Secretary LaHood sees another way: a vehicle mileage tax
A VMT plan would essentially tax you for the number of miles you drove instead of the number of gallons of gas you used. Even though that seems like the same basic thing, there are two reasons why advocates say a VMT is an important innovation. The first upside of this tax is that we wouldn’t be driving our hybrids on roads filled with potholes. Ideally, we’ll be driving more and more hybrid cars, or even electric cars. If our main transportation funding comes from a gas tax, that funding will start to dry up.
The second reason is that the gas tax is a flat fee imposed per gallon, not a percentage of your total gas bill. Therefore, it’s not subject to inflation or changes in gas prices (for more on gas taxes, see our GOOD Sheet on the subject). As gas prices rise, the purchasing power of the government to make infrastructure improvements doesn’t increase. Gas taxes are also notoriously hard to raise (see what just happened in California). No politician wants to be the one saying people should be paying for more gas—you may recall the “gas tax holiday” debacle from the 2008 campaign, where Obama boldly refused to join Clinton and McCain in pandering by advocating for removing the gas tax entirely during the summer’s gas price increases. In a world where gas prices rise and we drive more and more hybrids, the government’s transportation revenue could be drastically reduced.
Another, even more innovative solution, would be a what’s called a weight-mile tax, which would both make up for lost gas tax revenue from hybrids and have the added benefit of encouraging more hybrid drivers. The principle behind it is simple: heavier vehicles do more damage to roads , and should therefore bear more of the burden of paying for their upkeep. The U.S. trucking industry already pays such a tax with little problem, extending it to cars and SUVs would give drivers an additional tax incentive to trade in that Explorer for a Prius: each mile would cost less.
The main problem with either of these plans is monitoring. It requires a GPS chip in a car to see how many miles you drive. For many people, including myself, this starts to get a little Orwellian. Even if the information is merely miles driven, not where those miles were, it becomes a concerning piece of information for the government to have. Would we start seeing VMT records subpoenaed in murder trials or divorce cases? Almost certainly. That said, a few months of innovative thinkers and scientists putting their brains together must be able to find a way to put the privacy concerns to rest. I certainly hope they can, because Pigovian taxes like a weight-mile tax are absolutely necessary to solving our current transportation woes.
DISCUSSION: 11 Comments
No more potholes? Puhlease. Any pile of money in the government coffers will be hijacked where it is most needed. Social services, healthcare and education will always trump the roads. Yes, more money into the pile, but it’ll certainly be co-opted for other purposes.
one thought i had when i heard of this vmt a while ago (i think in portland) was exactly that of a fear of the government tracking me. then i remembered i had a cell phone (by choice) that could do pretty much the same thing (i don’t have any iphone or anything, but it’s still close). i’d say we need to give this some thought, maybe even a shot. if it doesn’t work, we can change the tax again, right?
Silly. Just increase the gas tax. Or better yet, get a carbon tax implemented.
This wouldn’t necessarily require GPS chips in every car. You already have an odometer so you could just add including your mileage to your yearly taxes. Or they could make a formula based on how far you live from work, how often you drive, the type of vehicle you drive and then base the tax on that. Sort of like how car insurance figures your yearly rate.
This idea has been gaining steam in Oregon too. The privacy issue doesn’t bother me that much, but I’m not sold for other reasons. First, moving to a mileage tax weakens the economic incentives for people to buy more fuel-efficient cars.
And while people are talking about this as a way of ensuring there’s revenue for infrastructure as people buy less gas, I hope they’re also watching how much Americans are driving, because that’s declining too. It’s down 14 percent in Oregon and Washington over the last year.
It seems like the concern of funds drying because of increasingly fuel-efficient vehicles is unfounded at the moment. The vast, vast majority of trips are still taken on regular all-gasoline vehicles. This administration itself has set goals on fuel efficiency decades out, I don’t see why we need to switch to VMT _right now_. I think the priority right now is raising fuel efficiencies in car and a higher gas tax will encourage that more so than a VMT (aside from the privacy concerns, costs, etc.), which may be of more use down the line.
“You already have an odometer so you could just add including your mileage to your yearly taxes.”Couldn’t they just keep a record of your mileage every time you get your car inspected or something? That’s already required, so it’s easy enough to make that part of the inspection. No need for orweillian GPS devices – that’s stupid, kind of scary, and would be expensive. It wouldn’t just take GPS devices, it would take GPS devices and a system to monitor the millions of cars on the road. Wouldn’t make sense.
I fully support VMT taxes – they create the right incentive for people to drive less and switch to other modes. But, they’re only one part of the solution. The weight-mile tax mentioned would be more efficient, and the gas tax should remain as well to account for the problems that are attributable to gasoline consumption. I think the privacy concerns are over emphasized. As mentioned in another post, everyone has a cell phone anyway, and what’s wrong with using whatever information is available for something like a murder trial?
I don’t know all the facts, but these are my initial thoughts…Our streets will never get fixed with these new ways of taxing us. What are they doing with the tax money they get now? Maybe we should send the government a bill every time the potholes ruin our car’s alignment or our tires…Taxing us on the amount that we drive just feels like more government control. Tax, tax and more tax. Everything is taxed. But where does the government get held accountable for the taxes they already get from us? They promote the converting to “greener” cars, better fuel efficiency, and when they find that that effects the money they get…. we (the people) loose no matter what happens. Gas prices go up – we loose, we convert to better cars – they find another way to tax us – and we loose again.
One, any new taxes will go the same place other taxes for repairing roads go, to balance local budgets and fund other projects. Two, this tax will be like the cigarette tax, it will hit those who can least afford to pay it and if people drive less, that means less tax revenue which means they’ll have to start taxing something else (like flatulence emissions). I live 20 miles from where I work (less for my other jobs) but that is at least 40 miles each day if I don’t go home for lunch or something and if I only drive to work. I can’t live near work because it’s too expensive (don’t be a prick and tell me to get a better job either, lucky I have this one) and I have a 12 year old pick up (I actually need the bed and use it every day) that gets 20 mpg at it’s best in summer and I drive 55 mph on the highway and keep tires well inflated and cannot afford another vehicle (would love an econobox for the times I don’t need to haul or trailer stuff, no $$$$). So, who will this affect? People who are poor, don’t live near good public transit and people who do real work in the real world (don’t complain when you contractors and landscapers charge you a mileage fee). Get a clue, this is not about helping anyone or anything other than taking more of your money. AndyB, NH.
The electric cars mean more power plants and distribution costs – and this will double everyone’s electricity rate, and the federal tax on electricty will go up more than enough to cover the missing funds from gasoline tax.