Oregon is about to embark on a first-in-the-nation program that aims to charge car owners not for the fuel they use, but for the miles they drive.
The program is meant to help the state raise more revenue to pay for road and bridge projects at a time when money generated from gasoline taxes are declining across the country, in part, because of greater fuel efficiency and the increasing popularity of fuel-efficient, hybrid and electric cars.
Starting July 1, up to 5,000 volunteers in Oregon can sign up to drive with devices that collect data on how much they have driven and where. The volunteers will agree to pay 1.5 cents for each mile traveled on public roads within Oregon, instead of the tax now added when filling up at the pump.
Hmmmm...must be May and must be time for me to reharp on an idea I've been harping on for over 8 years now. Here's the original harp:
All cars are subject to an annual fee based on miles driven. The fee will be per mile driven and will be inversely proportional to the EPA calculated city fuel efficiency figure. Keep reading for details...
Here's how it would work. Each year, drivers will be required to have their mileage checked at an authorized service facility. Based on the EPA certified city fuel efficiency rating provided by the EPA for the specific type of car, the car owner will pay a fee (call it F) per mile driven. The fee will be equal to the inverse of the EPA fuel efficiency figure.
So consider two car types: a gas guzzler (GG) and a fuel efficient car (FE). Suppose the gas guzzler has an EPA MPG rating of 15 mpg city and the FE car has a rating of 35 mpg city. The per mile fuel efficiency payment for the gas guzzler will be $0.067 per mile drive (1/15) and the per mile fuel efficiency payment for the fuel efficient car will be $0.029 per mile driven. If a driver of each type of car drives 12,000 miles a year, the GG driver will pay an annual fee of $804, and the FE driver will pay an annual fee of $348.
The Fuel Efficiency Payment has a couple of nice features:
1) It places a higher burden on those driving less fuel efficient vehicles--that should satisfy those blaming the SUV drivers for all of the problems*.
2) It places a higher burden on those driving more. By increasing the marginal cost per mile driven, total miles driven should decrease.
3) Assuming fuel efficiency and income are negatively correlated--that is, the rich tend to drive larger, more expensive, less fuel efficient cars--the Fuel Efficiency Payment places a higher burden on higher incomes.
4) It provides an incentive for drivers to switch to more fuel efficient vehicles.
Now that I've hopefully convinced you that a fuel efficiency payment will act as a type of gas guzzler tax that would be less of a burden on lower income drivers, would provide incentives for decreasing miles driven and would encourage a switch to more fuel efficient vehicles, I'd like to point out that the fuel efficiency payment is algebraically identical to a $1/gallon GAS TAX** that many economics including John and me think would go a long way toward solving many of the transportation related externalities.
While flat mileage taxes like that proposed for Oregon have some advantages (they provide a more predictable and steadier stream of revenues), they do little to encourage higher fuel efficiency. This seems particularly prescient given the recent shocking realization that low gas prices actually cause people to buy less fuel efficient vehicles:
With bargain gasoline prices putting more money in the pockets of Americans, owners of hybrids and electric vehicles are defecting to sport utility vehicles and other conventional models powered only by gasoline, according to Edmunds.com, an auto research firm.
There are limits, it appears, to how far consumers will go to own a car that became a rolling statement of environmental concern. In 2012, with gas prices soaring, an owner could expect a hybrid to pay back its higher upfront costs in as little as five years. Now, that oft-calculated payback period can extend to 10 years or more.