February 23, 2010

847 words 4 mins read

Driving Tax vs Gas Tax

This post was inspired by: an article from the Washington Post.

Currently we pay a tax on each gallon of gasoline we buy. Part of it is Federal, part State, and possibly even a local part (don’t know anywhere like this, but it is a possibility I suppose). As we move toward more fuel efficient vehicles (be they motorcycles, hybrids, or whatnot), the amount of tax money is decreasing. Obviously, the governments dislike this as they need that money to keep the roads up, one of the things that has been suggested is to replace the per gallon tax with a “Per Mile Driven” tax. This would mean that the cost of filling up, be it a hybrid or a truck would be much closer in cost. Sounds good for the gas guzzling truck, but not so much for anyone who bought a more fuel efficient vehicle to save on gas fill ups (and/or pretends to care that they really bought it to make the environment better).

Were something like this to pass it could put a serious dent into hybrid sales and also standard motorcycles (like the Suzuki Boulevard S40). Since Standard bikes are fairly cheap (new and used are generally well under $5k) and get good fuel economy (40-80 mpg depending on the model), they are popular sellers when gas prices start to rise, as they usually pay for themselves in a few months, depending on your commute (not to mention the awesomeness that is a motorcycle). Hybrids on the other hand are less of an impulse buy as they are quite costly. The main reason people suffer this cost though is because they are getting a savings at the pump. Remove that savings and hybrid sales will slump.

When Jon and I discussed this new tax, we kept coming back to the same question: How can you, the government/tax collector, prove how many miles I’ve driven?

Obviously they won’t just trust in people’s honesty and ask them to enter the number of miles they’ve driven since they last refueled, as I think we’d find that most people were driving something with mileage similar to a mobile launch platform.

One of the things offered as a possibility is a “new device linking the technology of a cellphone with a global positioning system unit and a car’s on-board computer” which “could be deployed within a few years, experts say.” This means we will have a special tax to pay for the cost of developing this, and possibly an extra tax on the registration of our cars. What about those cars that are too old for this? On-board diagnostics have only been mandatory since 1996, so if you have a car older than that are you exempt? Of course you aren’t, which means you have to do something special (aka more expensive since you haven’t been a good American and bought a new car lately)? What about electric cars that never fuel up? What about fleet vehicles that only fill up at their bases?

Ignoring the vehicles that don’t fill up, you could enter your license plate and state when you fill up and that would check the DMV database to figure out what the vehicle is and the EPA estimated mileage. Of course this screws over hypermilers and really benefits anyone who wants to drive like a crazy person, since everyone gets the same rate. This of course will lead to everyone entering a license plate for the most inefficient vehicle they know. Theoretically this could be policed via cameras at the pumps, but this will require a large investment in terms of hardware and software. And of course is defeated by anyone standing in front of the plate or obscuring various portions.

Another possibility for this tax is if every state implemented a yearly inspection for cars. The inspector would check the miles then and report it to the government. A few weeks later you get a GIANT bill in the mail with a schedule of how you will be making payments. Of course, any odometer can be rolled back, and the pressure to do so will be proportional to the cost of this new tax.

Eventually, the insurmountable problems will be surmounted and the government will decide whether or not they want to replace the existing Gas Tax with a new per mile tax, or in a worst case scenario supplement the Gas Tax with the new tax.

One nice thing about moving to a per mile tax would (hopefully) be the removal of manned tollbooths anywhere in America (sorry tollbooth workers). Everyone would have a built in toll tag so there would be no scrounging around for change, eliminating some of the slow down for major metropolitan traffic. Of course this also makes it easier for the governments to setup more toll roads with tolls varying depending on the time of day you are utilizing it. Then again, the per mile driven tax would essentially turn every road in America into a toll road, you just wouldn’t necessarily know what the toll is.