Michael Walden, an economist out of North Carolina State University, is a frequent contributor to popular media on economics matters. His latest idea is to eliminate the gasoline tax and replace it with a mileage tax.
A mileage tax charges drivers on how many miles they drive, not how much gas (or other fuel) they use. As such, it is a true user fee, since a driver's use of the roads is directly related to how many miles he or she drives. Since the mileage tax is independent of the type of fuel used and fuel efficiency achieved, it won't be affected by the use of gasoline alternatives, hybrid vehicles or gains in fuel efficiency.
True, I guess, but environmental economists would probably argue that one feature (not a bug) of gas taxes is incentivizing a transition to high efficiency vehicles. In other words, my neighbor who drives a Hummer and gets, what, 10 miles per gallon, pays 5 times the gas tax that my co-worker with the hybrid pays. This should encourage her to consider a more efficient mode of transportation. Where's the public interest? Unless you are in the Bush Administration, you have probably heard of something called global warming and other by-products of burning carbon-based fuels. In Principles classes, this is often called a "sin tax". Walden continues:
Implementing a mileage tax would be relatively easy. Global positioning devices, costing about $100, would be placed in every North Carolina-registered vehicle.
Let me stop him right there. There are approximately 7.1 million vehicles in North Carolina. Seems like a $700 million infrastructure (roughly 4 percent of the NC budget) investment to me.
The device would record drivers' in-state mileage, and the latest information would be relayed via satellite to service stations when drivers refuel. The mileage tax would then be added to the fuel bill. Out-of-state drivers without a device would be charged a traditional gas tax.
Oh, OK. So if your car is registered in North Carolina, you pay one price, but if your car is registered in some other state, you pay a higher (taxed) price. So all this system takes is someone at the station to look at your license plate, then determine which price to collect, explain the different systems to people traveling from out of state, and then collect and submit the taxes. Sounds very "easy to implement".
Yikes! Can you imagine the efforts drivers will take to avoid a mileage tax?
And, if there is not a more perfect tax than the gas tax then I'm the father of Angelina Jolie's baby. It does all of the things a mileage tax does, except more directly, and doesn't require a $100 gadget (isn't that a tax too?).
Jeez. And thanks for the heads-up on this piece.
Posted by: John Whitehead | January 17, 2006 at 09:55 AM
Another thing as a read the whole piece: a mileage tax eliminates the problems of the gas tax? What problems? (1) That people oppose it? Another tax would be welcomed by the masses? The increased gas tax in NC amounts to $15/year for the typical driver. A mileage tax costs $100 up front and then per mile? (2) Improving fuel efficiency shrinks revenues? Since when has fuel efficiency improved?
Plus, how are you going to get all gas stations up to speed with the GPS. Some that I frequent don't even let you pay at the pump.
I'm no Luddite, but I don't see any reason to fiddle with the gas tax (except raise the heck out of it).
[OK, start breathing again. Easy. Easy.]
Posted by: John Whitehead | January 17, 2006 at 10:07 AM
Is this guy serious? Does he even drive a car? Sometimes individuals in academia get so caught up in theoretics that they miss out on real world issues, like the fact that a hummer (or 18-wheeler for that matter) would put far greater wear and tear on a road. With this mindless thinking, someone who is ecologically sound with their driving decisions pays an equal amount of road mainanance. HArdly a program that anyone would allow to be passed through.
Posted by: David Andrew Taylor | January 17, 2006 at 10:39 AM
More on this at Env-Econ.
Posted by: John Whitehead | January 20, 2006 at 09:49 AM