Oregon Mulls Gas Tax Replacement

Oregon implemented the nation’s first gas tax way back in 1919, and now it seems ready to blaze a new trail once again. The state has been testing out a new tax based on miles driven rather than fuel consumed.

The gas tax is broken, advocates claim, and this vehicle-miles traveled (VMT) tax could be the solution our transportation infrastructure requires. The problem is that as cars become more and more fuel efficient, they consume less gas, pay less in taxes, and government has less money to spend on road and bridge upkeep. Combine that with the fact that the gas tax hasn’t been raised or adjusted for inflation in twenty years, and you’re confronted with an undeniable fact: we’re not paying the true cost for driving.

Raising the gas tax is politically toxic, especially at the federal level. Oregon isn’t holding its breath for Congress to act and has been working since 2001 to test out the VMT tax. The Economist reports:

The VMT policy has been fine-tuned in pilot programmes; the once-sceptical American Civil Liberties Union is now satisfied with the privacy protections (personal data is destroyed after 30 days), and local environmentalists cautiously back the idea, though they would like lower fees for more efficient vehicles. […]

A [state] bill that would have applied a VMT fee to all new vehicles doing 55mpg and above died in the last legislative session; instead, 5,000 volunteers will join a new VMT scheme in July 2015. They will be charged at 1.5 cents per mile rather than paying the state petrol tax (30 cents per gallon).

Incorporating a vehicle’s weight into the VMT scheme makes even more sense—18 wheelers do more damage to roads per mile traveled than smart cars. Again, we’re not holding our breath for congressional action given today’s political climate, but this makes sense. In the meantime, telework can take cars off the road, especially at peak driving times (rush hour).

Normally speaking, VM is skeptical about complicated tax wheezes like this one, and before giving this our seal of approval we’d like to know a little bit more. Governments are always looking for clever new ways to raise more money with less squawking from taxpayers, but we think that on the whole most governments spend too much time and energy figuring out how to tax people, and not enough energy figuring out how to cut costs.

In many states, the highway repair and construction business is a very comfy little corner of the economy where politically well connected firms, often with labor union support, dominate the bidding process. Politicians and contractors happily connive at ways to pass costs onto the taxpayers. This kind of routine backscratching doesn’t usually get much press scrutiny and over the decades these systems become less and less efficient.

If the country or a particular state really needs money to repair, maintain and improve its road system, we are all for getting it done. But we are deeply suspicious of claims by bureaucrats, contractors and their paid lobbyists that vast quantities of money without reform is the only way to fix the roads.

What every state in the union needs much more that glitzy new ways of taxing drivers would be some smart think tanks coming up with innovative ways to cut the costs of routine expenses like infrastructure repair and sets of best practices to make governance generally cheaper and more effective.


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  • rheddles

    Make ’em toll roads. How else are you going to get money from the Caliphornians driving to Seattle?

    • qet

      No, please don’t make them toll roads. I drive a toll road every day. The reason for the toll is long past, but my state would never voluntariliy rid itself of an in-place revenue source. No, I consider well-built and well-maintained roads to be part of the basic deal I get from government for my general taxes. But clearly I am in the minority.

  • qet

    “we think that on the whole most governments spend too much time and energy figuring out how to tax people, and not enough energy figuring out how to cut costs.”
    Yes. There is no political constituency for cut costs, but there are multiple constituencies for the spending funded by the tax increases (not to mention the favorable press given by the op-ed contributors of the local newspapers).
    Additionally, I have not given the ACLU or any other outfit my proxy or power of attorney to determine when my privacy is adequately guarded. Once such a system is in place, whatever protections exist at the outset will be loosened over time (and not much time, either) in the name of all kinds of civic goods. These VMT programs ought to be killed in their shells before they can hatch out.

  • jeburke

    There are multiple revenue streams that support road and street construction, maintenance and repair — state gas taxes, federal gas taxes, tolls, licensing fees, and general revenues at both the state and municipal levels, primarily real estate taxes in the latter case. Which funds are available for which road projects is a complicated matter. General maintenance and repair of local streets is supported mainly by local taxes with a variable boost from state aid. Construction of new interstate interchanges will be a federal-state expense. Everything in between is a mix.

    So, how can any Oregon pol claim with a straight face that there would be a one-to-one relationship between its state gas tax and an alternative vehicle milage tax?

    And by the way. Where is gas only $2.79 a gallon? I want to move there.

  • Jacksonian_Libertarian

    “smart think tanks”

    I’m as suspicious of studies as I am of big government. We already pay a fuel tax, and
    registration fee (weight dependant), why is a new tax needed? Just adjust the registration fee to reflect the mpg a vehicle gets and its use of the roads.

    The compliance costs of all the hundreds of taxes and fees the taxpayer now pays runs as much as 25% or more of all taxes and fees now collected. I would like to see a flat tax on all personal income at the local, state, and federal levels, and get rid of all the other taxes and fees (property, business, sales, utility, social security, Medicare/Medicaid, everything). This would save the economy $1+ trillion a year in compliance costs, and give the tax payer a true understanding of how much he is paying, as well as feedback to the government from the voting booth, as to what the tax payer is really willing to pay for.

  • Andrew Allison

    Improved mileage notwithstanding, gas consumption (and hence tax revenue) was 8.8% higher in 2012 that 1992! The argument that the not enough of the gas tax collected is spent on infrastructure is at least as strong as that not enough tax is being collected. None of which has anything to do with the real issue, which is that it’s commercial vehicles which are getting a free ride.

  • Fat_Man

    Can’t they just get the information they want from the NSA?

    The name for anyone who believes that the information gathered by gps gizmos attached to our cars by the taxing authorities will not be available to and used by the rest of the government for political purposes is SUCKER.

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