Tuesday, February 15, 2005

Miles Tax Instead of Gas Tax?

CBS News reports that some states are considering going to per mile taxes to deal with both the lower revenue from gas taxes due to fuel-efficient cars and the overall problem of congestion.

Congestion taxes in some ways are laudable, as they can help motivate people to use public transportation and use the road at less congested times of the day, but that doesn't appear to be the main point of the new, proposed tax. The article mentions that "[t]he system could also track how often you drive during rush hour and charge higher fees to discourage peak use. That's an idea that could break the bottleneck on California's freeways." However, it appears that the for the most part this new tax would be simply looking at how many miles you traveled. This is idiotic. The gas tax already is effectively taxing cars by the mile as every extra mile you travel leads you to consume more gasoline, thus a higher per gallon tax means a higher cost per mile. At the same time, the standard gas tax also taxes less fuel-efficient cars more and thus causes an incentive to be more efficient which is good from both an environmental and an economic perspective. Besides, the gas tax already achieves the main goal of a per mile tax without the costly new electronic installations and the privacy concerns.

So what about the revenue problem? If there isn't enough revenue coming in from the gas tax because of more fuel-efficient cars, then raise the tax. The higher tax will lead to better incentives and it will raise revenue. I guess that’s not as much of a sexy solution…

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