Thursday, February 17, 2005

A new kind of tax

It is not every day a new tax is invented.

As more and more hybrids hit the road, cash-strapped states are warning of rough roads ahead. Officials in car-clogged California are so worried they may be considering a replacement for the gas tax altogether, replacing it with something called "tax by the mile."

Seeing tax dollars dwindling, neighboring Oregon has already started road testing the idea. "Drivers will get charged for how many miles they use the roads, and it's as simple as that," says engineer David Kim. Kim and his team at Oregon State University equipped a test car with a global positioning device to keep track of its mileage. Eventually, every car would need one. "So, if you drive 10 miles you will pay a certain fee which will be, let's say, one tenth of what someone pays if they drive 100 miles," says Kim.

I personally do not have an innate problem with this exact tax. I think the tax is the fairer in some circumstances than a gasoline tax. The amount of gasoline you use is based on what type of car you drive and how much you drive. Which the environmentalists love to point out the gas guzzling SUV's as prime examples of why gas taxes need to be raised.

I suspect that there are a fair amount of cars driven by older people with fixed incomes. These cars may be in disrepair or of older models which are not as gas efficient. I also suspect there are a fair amount of older cars or cars with poor gas mileage driven by poorer people. So in taxing the gas, you are also punishing people for driving cars with poor gas mileage. That could be SUVs or old cars driven by your grandparents. The tax does not differentiate. Which that was the point of the environmentalists in raising gasoline tax, it just affected poor people as well as the rich people who could afford it.

I DO have a problem getting equipped with a GPS in my car if i do not want one, but in the next sentence the article contradicts itself.

"The new tax would be charged each time you fill up. A computer inside the gas pump would communicate with your car's odometer to calculate how much you owe."

A simple radio device that communicated how many miles i drove, just not where would be reasonable to me. Of course, in about 3 months people will figure out who to reduce the mileage it sends to save them money, but that is another issue.

My problem with this tax rests on the fact the gasoline taxes, federal laws, and technology are accomplishing part of what the environmentalists wanted. People are using less gas and producing less CO2. Of course this was not what the state wants. They want people to drive less so they do not have to spend as much money keeping the roads in good condition. Of course, it should be noted that making people drive less will only reduce economic activity which will further lower revenues, but they have not got to that point yet.

I also have a problem with being taxed for the same activity twice. You will be taxed when you buy the gas and then you will be taxed for using the gasoline on you next visit to the pump. It is like being taxed when you pull down you pants when you take a dump and then being taxed when you flush the toilet. That is simply and clearly wrong.

Other bloggers: Road Rash,Road Rash II, One way or another

cube

2 comments:

Dave Justus said...

I don't neccessarily agree that this would be double taxation.

First, taxes on a single activity can have multiple metrics used to generate the amount of tax do on an activity. In this case, your 'road use tax' would be x per gallon used plus y per mile driven. This doesn't strike me as being necessarily unfair.

Second, you can be talking about two seperate activities. If you accept the propostion that using roads has a general cost that should be recouped in taxes and using gas has a seperate general cost (pollution perhaps) that should be recouped in taxes as well, then taxing both activities makes sense. In some cases you will be doing both activities at once (driving on a road in a gas powered car) and will accrue both taxes. In other cases (driving an off-road vehicle, driving an electric car) you will only be doing the one thing and thus only pay one tax.

My biggest issue with things like this though is that the specific taxes, imposed because of specific social costs an activity generates, almost always go into a states general fund and the expendatures on solving the problems causes and the revenue from the taxes is never connected (and almost never even close to the same ammounts).

Cubicle said...

"First, taxes on a single activity can have multiple metrics used to generate the amount of tax do on an activity. In this case, your 'road use tax' would be x per gallon used plus y per mile driven. This doesn't strike me as being necessarily unfair."

I disagree. The purpose of a gasolie tax is to fix roads the purpose of a miles driven tax is to fix roads.

You are doing one thing drving you car. And you are getting taxed twice to do that.


"Second, you can be talking about two seperate activities. If you accept the propostion that using roads has a general cost that should be recouped in taxes and using gas has a seperate general cost (pollution perhaps) that should be recouped in taxes as well, then taxing both activities makes sense. "

I would agree IF i accepted that proposition. Taxing gas to reduce pollution may work, but historically that is not the reason gaslione has been taxed.

Of course it has been taxed for just geneal revenue reasons before, but at the state level it normally is for roads.