Just when Minnesota raised its gas tax for the first time in more than 20 years, the gas tax may be heading for the ash dump of history.
That's probably overstating the future a bit but momentum is increasing to charge people based on the number of miles they drive. The University of Iowa has been given a federal grant to determine whether billing people for the miles they drive makes more sense.
The problem with the gas tax is cars are getting better mileage and people are driving less because of high prices.
There's money to be made here. The project is looking for people to participants in the 10-month study. Small computers will be attached to their cars and they'll be sent mock invoices. They'll also make up to $895, the Chicago Sun Times reports today. Unfortunately, Twin Cities or Minnesota drivers aren't part of the study.
The study is also another example of the left hand not knowing what the right hand is doing. The federal government has given the university the money to study the idea. President Obama has already said he won't pursue it.
But the idea could become the new census. The primary opposition to it comes from privacy interests. "There is a real concern on the part of many in the public that this is the ultimate of Big Brother watching and knowing where you are," says Kansas Transportation Secretary Deb Miller.
If better milage is resulting in lower revenues from the gas tax, then the simple solution seems to be: raise the gas tax. That does not require monitoring individual driving habits, etc. It also provides further incentives for driving fuel efficient vehicles. Maybe I'm missing something, but I just don't understand this push for a milage tax.
The gasoline tax is supply and demand working in the way intended. The government wants people to use less gas, so encouraging the use of fuel efficient vehicles is a good thing. Fewer drivers would also be a good thing as it would decrease the demand for more and wider roads. This would decrease the need to spend money on roads.
The real issue is that increasing fuel efficiency means the gas tax needs to be gradually increased to maintain the income required to maintain roadways. Politicians lack the political will to handle that hot potato. Apparently they hope that a whole new system (taxing by the mile) is confusing enough that taxpayers won't realize they are paying more to drive.
Think of how much money would be wasted developing a new tax system to collect the same money.
Like anonymous and kennedy, I think the gas tax is going the job its designed to do. Having said that, there may come a time soon where transportation funding will have to be supplemented by other than the gas tax. As electric vehicles - or non petroleum powered vehicles - rise in popularity, we'll have to find new road funding sources.
This is the problem with relying on Pigovian taxes to fund government:
Sometimes they work.
I'm sure we'll have the same problem with Cigarette taxes as the years go by.
The gas tax is an effective tool to encourage fuel efficiency, but as we move to electric vehicles, road funding should also shift to a charge on that energy source. Electric cars will not be pollution free, since fossil fuels still provide a large portion of the electricity on the grid.
Speaking of Pigovian taxes, the public images of candy and soft drinks are increasingly negative. Maybe taxing them will provide a replacement for shrinking tobacco income...
Don't laugh, the soft drink companies aren't.
A mileage tax makes no sense unless there is heavy investment in a comprehensive public transportation system through the state.
That might be one of the attractions of a by-the-mile method, JSmith. The gas tax is constitutionally dedicated to roads and bridges rather than transit. It's one of the things the sales tax increase was supposed to rectify.
I have to admire the fact that this is the only news outlet and definitely the only blog comments section where the term "Pigovian" would show up, and everyone apparently knows what it means. I am in awe of you people!
the gas tax is designed as a milage tax, for those who use other fuel sources they are supposed to pay the motor vechile fuel tax also.
I think I remember a US Senate Campaign bus that needed to pay Minnesota excise tax on the veg oil he used to power it.
Let's not get too accepting that the gas tax has changed driving habits. The price of gas is relatively low today. A major reason for less driving is that fewer people have jobs to go to. As the economy recovers, consumption will go right back up. The tipping point for changing behavior is around $4/gallon.
The State of Oregon (which was the first to have a motor fuels tax, back in 1919) completed a Road User Fee Pilot Project which shows that you don't need what most people think of as a "GPS unit" to be able to implement a mileage-based tax. Then, those who argued against the tax because of so-called invasion of privacy had to change their tune and claim they opposed such a tax because there was no audit trail (i.e., the state couldn't confirm that the unit was properly tracking their mileage).
The report makes an excellent case (IMHO) for such a tax, debunking most arguments:
• current motor fuels tax encourages more economical vehicles - there's no reason that the mileage rate has to be uniform; the legislature could opt to have a rate based on weight/mileage/whatever.
• too costly to retrofit vehicles - you don't; the tax would be phased in over a 20-year period with only new vehicles being equipped (and much of the equipment used is standard on new vehicles).
• double jeopardy - you'd credited for the motor fuels tax at the time of purchase so those vehicles paying a mileage tax wouldn't pay the motor fuels tax.
Isn't our MN economy based on our ability to have mobile goods and labor? Not only that but those of us who grew up in rural Minnesota had to move to the metro to find decent jobs. Now we'll be punished for visiting our family? I'd rather see the gas tax at $2 a gallon than a mileage tax, and I'd be more than happy to buy a fuel efficient vehicle to keep my own costs down. I like paying my tax at the pump as well, getting an invoice in the mail would be akin to paying your taxes every April 15th.