Tuesday, August 04, 2009

Vehicle Mileage Tax

One effect of the Cash for Clunkers program is that it will have a direct and immediate reduction in the amount of fuel tax collected.

Apparently, Congress is exploring a Vehicle Mileage Tax to replace the current gas tax.

I would not mind such a change. I think it would be great to have insurance calculated per mile as well. If people were directly confronted with the cost of each trip, they might cut out unnecessary trips.

The problem, though, lies with the ability to measure miles driven. The gas tax can be charged at the point of sale, the mileage tax would have to measure the behavior of each vehicle.

Taxes that depend on measurements taken by individuals have a nasty habit of devolving into chump taxes. Measuring miles driven is likely to involve intrusive technologies like GPS units placed in each car and increased monitoring of our driving habits.

Much as I like the ideal of charging tax on mile driven, I think we are better to continue to pursue the path of charging taxes on resources consumed.


George VII said...

If you happened to see that Nissan announced that its Leaf vehicle (electric) was proceeding and would be released for sale next year (on a limited basis) it will make you think some more. While they may never dominate the market, if these vehicles are charged at home, the revenue stream into the Highway Trust Fund is affected. The gas tax (on liquid fuels) has a lot of advantages, but if you can't collect the tax, the revenue is going to have to come from somewhere else.

Scott Hinrichs said...

That's simply an accounting problem. Taxes are already collected on electricity consumption. Shifting some of that to the Highway Trust Fund is simply an internal accounting matter.

While the current tax on liquid fuels fails to take into account the differences in vehicle mileage rates, it does consider the amount of wear and tear exacted on the roads, since heavier vehicles tend to cause more wear to the roads.

y-intercept said...

I contemplated adding one more paragraph to the post that would proposed a trial system in which people could choose their tax system. This kind of happens in trucking where there is both a fuel tax and mileage tax, and complex reporting formulas.

BTW, the electric car will pose more than a tax problem. It will create energy theft on an unimaginable scale.

For example, a local park is a hot spot with outlets for laptops.

I guarantee that all unguarded outlets will become targets for thieves when we have power hungry batteries on wheels.