All Cars, All the Time

Funding the Future: Per Mile or Per Gallon?

With Oregon’s ongoing research into per mile verses per gallon gasoline tax, I’ve wondered what the best approach is. Oregon’s argument is its gasoline tax revenues have been stagnant and legislators have been unable to boost the tax rate past its current 24 cents. The solution that they are investigating is a GPS based system that would tax users for miles driven on Oregon roads, but not for miles driven out of state. Drivers would pay something like 1.25 cents per mile driven with the possibility of variable rates based on time of day to encourage off peak driving. The onboard system would transmit data at the time of a fill up and the existing tax would be subtracted and the equivalent mileage tax added.

There are loads of issues with the proposal: Why should fuel efficient car drivers pay the same per mile that SUV drivers pay, won’t this discourage fuel conservation? How would the system be integrated into the fuel distribution network? Are all oil companies going to allow Oregon to integrate their software into the oil companies’ proprietary systems? Since oil companies would collect the data, what’s to prevent them from using it for marketing purposes? If the system logs users’ whereabouts, what’s to prevent all sorts of privacy invasions? If the system does not track whereabouts, how would the correct tax amount be verified in the case of a dispute?

Oregon is betting that most new cars will have GPS standard in the near future, but all of the GPS systems will not have a standard interface that Oregon could attach its system to. Also, it is doubtful that Oregon could implement a system of such scale on its own. More than likely a large number of states would have to adopt such a system to make economies of scale work.

I just don’t believe in this mileage based system: the extra cost of hardware and bureaucracy do not make it sensible at this time or in the foreseeable future. A short term solution for Oregon is to simply increase the state’s gasoline tax. Yes, it is a bitter pill but one that must be swallowed to prevent the greater ills of a GPS system that could be proposed. Who knows what will power our automotive future and whether or not it will be easy to tax. Until it becomes clear what will be driving, I think that the current system of taxation is fair.