How would you feel about being taxed for every mile you drive? With gas tax revenues falling, at least 18 states have given some consideration to taxing motorists by how far they drive. And next year a pilot program in Oregon will help measure the feasibility of such a tax.
Interest in the new tax has blossomed as states see their revenues shrinking from gasoline taxes -- usually used for road maintenance. The decline results from new cars with better gas mileage and thus less gasoline sold to be taxed. And this trend is sure to continue, since federal regulations require automakers to keep boosting the gas mileage of new cars, SUVs and pickups. In addition, the spread of all-electric cars and gas-electric hybrids has further lowered gas tax revenues.
"Per-mile charges are the most high-profile and discussed alternative to the gas tax," said Jaime Rall, a transportation specialist at the National Conference of State Legislatures. "States want to know if this is going to be a viable way to fund transportation into the future."
The question of lost revenues with the gas tax arises especially with all-electric cars like the Nissan Leaf or Tesla models. Those motorists pay no gas tax at all, although their electric bills do include some taxes.
The Oregon pilot programs seeks to demonstrate whether a per-mile tax is a practical possibility. The state is finding 5,000 volunteers to pay 1.5-cents-per-mile tax instead of the 30 cents-per-gallon gas tax. Devices will report their mileage to the state. Other states are trying smaller pilot projects, including Nevada, Washington, Minnesota and California. The U.S. Senate passed a bill calling for a $90 million pilot project involving 10,000 cars. But the House leadership killed the bill after complaints from rural lawmakers that such a tax would unfairly penalize their constituents, who tend to drive farther than city drivers.
Originally developed for insurance companies to measure driving habits and potentially use them to lower your rates, these devices now are being modified to simply track mileage driven for state tax purposes. Progressive Insurance gives policy holders who volunteer a device to plug into the diagnostic port in their cars. The device sends back not only the number of miles driven but also whether you drive aggressively (speeding up, then braking sharply, for instance).
In a similar program, GMAC insurance uses technology already installed in some General Motors cars. The OnStar service, which also can alert an operator to call 911 in an emergency or remotely diagnose a car's problems, reports actual miles driven for subscribers who sign up for the insurance plan to qualify for discounts.
Some analysts raise the questions of whether the states are playing fair. "It absolutely seems unfair to be looking for new ways to generate tax revenues as a reaction to cars becoming more fuel efficient," said Karl Brauer, senior analyst at Kelley Blue Book. And he points out such a tax might actually discourage fuel efficiency. Let's say the owner of a low-MPG pickup or large SUV is paying a per-mile tax rather than a gas tax. He might be less motivated to trade for a vehicle with higher gas mileage.
"Raising the gas tax would be a faster, more cost-effective and equitable way to increase tax revenue," Brauer said.
A major roadblock to adopting a per-mile tax is the specter of mandatory tracking of all citizens with GPS-like devices. Activists across the political spectrum from the Tea Party to the American Civil Liberties Union have raised privacy concerns.
However, in social media and elsewhere, Americans seem increasingly willing to forgo privacy for new technology. And with roads and bridges in many states already in disrepair, either a per-mile tax or other solutions must be adopted to generate financing for infrastructure projects.