Taxing You by the Mile Instead of the Gallon

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PORTLAND, Ore. -- Imagine someone taxing you every time you drove a mile. That's exactly what the state of Oregon wants to do to its drivers. And there's a good chance a mileage tax could soon be imposed on every driver throughout the country.

Those who've been driving a more fuel-efficient car may have been cheering the fact that not only were they paying for less gas, but also paying less in gas taxes. But as more and more Americans have done the same thing, governments have been noticing.
Money from Gas Tax Sputtering?
Some states have actually seen a drop in the money they take in through a gas tax -- here in Oregon, about $5 million a year. And since that's how they pay for the roads and maintain them, they've decided they have to do something about it. Some are pushing a mileage tax, saying it's necessary to replace the gas tax because soon there'll be many cars that won't run on gas at all.

James Whitty of Oregon's Department of Transportation headed up a two-year test of a mileage tax with 300 Oregon drivers and their vehicles.

"The reason the gas tax has worked for so long, 90 years now, is because everybody pays a little. And if some people aren't paying anything, the system starts to fall apart and we need a replacement," Whitty told CBN News.

Punished for That Prius?

But there's a fly in the ointment. In switching from a gas to a mileage tax, fuel-efficient cars could well end up paying more tax than before and gas guzzlers less. Now Oregon's known for being radical about going green, and it's pushed hard to get Oregonians away from gas guzzlers that leave a large carbon footprint, or in this case, tireprint.

As Chris Hagerbaumer, the Oregon Environmental Council's deputy director, put it, "I do think those who make environmentally conscious choices about what they drive should be rewarded for that."

But that's the opposite of what would happen if the mileage tax was applied at a flat rate. Imagine everyone's driving a thousand miles a month. Those in a car getting 10 miles to the gallon pay $24 a month in state gas taxes, at least in Oregon. Those getting 40 miles to a gallon pay $6. A mileage tax would likely be 1.2 cents per mile. Both car owners would end up paying $12 a month -- half-off for the gas guzzler, double for the gas-sipper.

Jason Williams of the Taxpayers Association of Oregon stated, "To me it seems that Oregon is going to punish people for doing the right thing."

But environmentalists like Hagerbaumer have been assured by transportation official Whitty that the mileage tax can be modified. As Whitty put it, "It doesn't have to be a flat rate system."

Hagerbaumer said lawmakers could structure the new tax, "so that the person driving the more fuel-efficient car pays just a little bit less per mile than the person driving the gas guzzler."

Others, though, like the conservative Williams, still have big problems with the mileage tax.

"I think this is an invasion of our privacy and a colossal waste of our taxpayer dollars," he said.

$33 Million to Implement

It's estimated it would cost some $33 million to implement the mileage tax in Oregon alone -- hundreds of millions nationwide. And special devices would have to be put in to cars to add up the miles and tax them.  These devices could well add about $225 to the price of a car.

"We already have the government taking over General Motors. Now they'll be taking over all of our motors," Williams said.

Dr. David Kim of Oregon State University doesn't see it that way. He and colleagues at OSU came up with the system for Oregon's trial that tallied miles on a car, communicated them to cash registers at gas stations, deducted the gas tax and added the mileage tax to the bill. Kim says the devices to do all this are relatively cheap, and the beauty of the system they worked out is that motorists won't have to do anything special to pay the mileage tax.

"We were concerned about making it easy for the motorist so they didn't have to do some complex thing," Whitty said.

Big Brother in Your Car?

But the biggest worries appear to be over privacy. Folks wonder if this will be a way for government to track motorists and keep a record of their movements.

Whitty and Kim said they made sure the devices wouldn't do that. Kim wanted to assure people, "There is no trip data stored in the on-vehicle device."  Whitty added, "We eliminated the tracking device because we didn't want to know where they were going."

Some suspect there may be a sneaky environmental agenda going on here: taxing miles to make people want to drive less of them. 

Whitty said that's not his agenda, but it did happen in the tests: "Because we had a screen in the car so people could actually see what was happening as they drove, some people did drive less because they were more aware of it."

Environmental activist Hagerbaumer pointed out, "An economist will tell you that what you tax, you get less of. So when you tax gas, that's the most direct way to reduce the use of gasoline. When you tax miles, that's the most direct way to reduce the amount that people drive."

But for most states, the attraction of a mileage tax is it should be a more steady source of revenue for roads as fewer people drive gas guzzlers and pay less gas tax. Several states are doing test programs now, and Oregon Representative Earl Blumenauer is pushing for a test-study nationwide. That led smaller-government activist Williams to warn, "So government may be coming to your dashboard any day now."

Williams told CBN News the blogosphere has buzzed with people protesting the fact they might soon have to pay a mileage tax. And when transportation officials in Washington suggested it for the whole country, angry reaction poured in so fast and furiously, they quickly stopped talking about it.
But it's definitely not going away. It appears policy makers so love the idea, there's a good chance a mileage tax is going to be coming to your gas station in the next few years.

*Original Broadcast Date: September 14, 2009.

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Paul  Strand

Paul Strand

CBN News Washington Sr. Correspondent

As senior correspondent in CBN's Washington, D.C., bureau, Paul Strand has covered a variety of political and social issues, with an emphasis on defense, justice, and Congress.  Follow Paul on Twitter @PaulStrandCBN and "like" him at