Two flaws challenge Governor’s mileage tax

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By Ken Niezgoda, BIZ Reporter

Oregon’s plan to tax drivers based on road use contains the fundamental flaw it attempts to remove: Tax collection that is linked to gas consumption.   As more fuel efficient vehicles hit the road, Oregon’s ability to collect taxes to maintain its multi-billion dollar transportation infrastructure is eroding. Simply put, as gas sales diminish, so does gas tax revenue.

“As Oregonians drive less and demand more fuel efficient vehicles, it is increasingly important that the state find a new way, other than the gas tax, to finance our transportation system,” stated Governor Ted Kulongoski in the Jobs and Transportation Act 2009.

Oregon created the Road User Fee Task Force to explore a way to collect fees based on miles driven rather than gas consumed. The task force developed a plan in which Oregon drivers would pay tax based on miles driven. Miles would be tracked using technology such as GPS devices. Drivers would pay a mileage tax instead of a gas tax each time they filled up at the pump. The plan is designed to be phased in over the next 10 to 20 years.

“The motorist who pays the mileage fee at the pump does the same thing as before—he pays the fuel bill after refueling, either by cash or credit. The only thing new is the type of charge paid—the mileage fee,” states the Oregon’s Mileage Fee Concept and Road User Fee Pilot Program final report.

Two fundamental flaws exist in this plan.

Since taxes are still collected each time a driver fills up on gas, then all-electric commuter cars, which do not consume gas, must be taxed using a different paradigm. During the proposed road use fee phase-in over the next two decades, all-electric vehicles will become more prevalent.

Also, the Oregon plan is designed to tax only Oregon drivers based on miles driven. Out-of-state drivers would still be taxed based on fuel consumption. As more fuel efficient cars become the standard, out-of-state drivers will pay less tax proportionately. In turn, Oregon drivers will be burdened with more taxes in order to maintain the transportation infrastructure.

Technology implementation costs, privacy issues, and viability aside, the plan doesn’t effectively address the limitations of a gas tax since it still relies on gas consumption. Unless drivers from all states, as well as all-electric cars, can be assessed taxes based on usage, the plan does not offer a superior solution to the existing gas tax plan.