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Taxing Drivers By the Mile, and Not By the Gallon

From Yahoo Opinion.

"As more Americans buy hybrid or electric cars, drivers in traditional gas-only vehicles are bound to start asking: Why should I still be paying more in fuel taxes? Don’t we all use the highways?"

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"There is an alternative, one that is fair, already proven, and, based on a new study by some 80 experts, the best way to start financing surface transportation.

It is a pay-as-you-go fee system based simply on distance, or a tax on “vehicle miles traveled” (VMT). The idea is the centerpiece recommendation of the study, released Monday, called “Well Within Reach: America’s New Transportation Agenda.” The report is based on a recent three-day conference of experts at the University of Virginia."

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"The study should help revive this necessary change for maintaining the nation’s 61,000 miles of highways. They’re in urgent need of repair and improvement – even as governments, especially the Federal Highway Trust Fund, collect less and less from gas taxes.

“Innovative thinking is needed to develop the next generation of user fees,” the report states. “Specifically, future funding mechanisms should not depend primarily on fossil-fuel consumption – which the government is actively seeking to discourage through a number of other policies.”

Taxing drivers by the mile won’t be easy. But the report does a service by offering proposals to overcome several obstacles and objections."

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"The user fee can be calculated by various methods, including the way some states now check mileage during vehicle inspections or by tracking cars using toll-road transponders. Heavier vehicles such as freight trucks that severely damage roads would need a special system.

The report recommends pricing be varied as an incentive to discourage travel during peak traffic or to encourage more fuel-efficient vehicles. And fees need to be indexed to inflation – unlike the current federal gas tax (18.4 cents per gallon for cars), which hasn’t changed since 1993."

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"Electric vehicles are due to hit the mass market by 2012, and Mr. Obama is pushing automakers to increase their miles-per-gallon averages by 2016. Such changes call for phasing out the gas tax and starting a new financing system that is still based on the concept of users paying for this government service."

If you drive 5,000 miles/year, your tax (at the proposed .02/mile) would come to $100--this may or may not be cheaper than the current tax we pay on gasoline. You might want to start keeping track of how much gas you buy in a year to determine your federal per-gallon tax total, which would be the number of gallons you bought in a year X .184 (the 18.4 current gas tax in decimal form).

The switch would serve to bring down gas prices for ALL of us by about .20/gallon, and cause lower driving-related taxes for those of us who don't drive very much.

Since I don't drive but once a week to a laundromat, I out on maybe 20 miles/month. Once a year, I travel with cat to the vet. Something tells me I'd be a big tax bust for Obama.

This tax plan is a disguised proposal for a big commuter tax. Start thinking about how you can cut down your annual miles before this thing goes into effect--ride the bus, carpool, bike, walk, or use a company car and let your boss pay the taxes. He can probably write them off anyway!

Posted by Cute at 8:49 AM

Labels: financial (non-tax), taxes