Saturday, February 21, 2009

Mileage tax??

I have had multiple mood swings on this subject, and finally wrote the following on the r-squared energy blog. As usual, my opinions are somewhat contradictory to themselves. I have socialist leanings when I believe the goal is beneficial to society at large, or that a market based solution would be too costly in dollars and/or in reduction of the desired effect. Social Security and unemployment insurance, for example. These programs are most effective being government mandated and run- if they have effective oversight and maintain their goals of being safety nets and not entitlements. But for other things, like this, I believe in a much more market based approach- government has to collect taxes because it has these roads to maintain. But the benefit to society and the benefit to the individual users isn't always equal- there's no reason a hermit in a shack in Montana, or a car-less city dweller ought to share equal burden for road maintenance. Charge the users what it costs to maintain. Users will decide if the costs are worth it- they can alter their transportation choices to fit their needs and budget.

(I suppose a true market based solution would have the government sell off the roads to private investors and let them deal with it. I'm not sure that's workable.)

(I also forgot to account for existing toll roads- I would imagine it wouldn't be difficult to have a system that subtracts out miles driven on private roads. The tollway entity could send out coupons once a year as well as share the data with the federal computer system. Drivers could proudly present their coupon (or hell, sell them) and the federal system would make sure the data is valid.)

Comment begins.... NOW:

At first glance, I too thought this was a ridiculous idea. After seeing the comments on how this might be a more long term solution seeing that gasoline will go away some time in the next 1000 years, it started to make a little more sense.

However, the costs seem to outweigh the benefits. This is not the kind of infrastructure we need to be building. Everyone seems to have looked at the London gate-tax as some kind of perfect example of how technology can solve a problem, where it really shouldn't be. It's a unique situation where technology just happened to be the easiest solution. Same thing as the EZ Pass system- technology is the right solution. But that doesn't mean that technology should be used to solve everything.

If you look at the various problems that need to be addressed: lack of funding for the road system, encouragement of fuel efficiency, and the erosion of funding that would occur as gasoline usage gets reduced, I think a multi-pronged approach becomes necessary.

At the moment, adding more kinds of taxes doesn't seem like a good idea. But when IS it a good idea? I would propose that a mileage based tax does need to be put into effect. But that a gasoline tax needs to remain.

How this should be implemented is thus:

Mileage taxes based on odometer readings. It's already illegal to screw with odometer readings, odometer readings are already something people are accustomed to paying attention to when they buy and sell cars. Further, in most of the populous areas, people already have to take their cars in for safety/smog checks where the odometer reading is taken down. And further again, people have to pay for license plates every year. Why not combine the processes? Every year, you have to go to a facility. They run the various tests, they give you the approval and a bill for the year's plate sticker. That bill comprises:

1- the cost of the plate sticker and
2- some kind of facility charge. this is up to the states to determine. There are a variety of ways to incentivize these costs- free of charge if you show up and your car meets the standards. A higher charge if you dont' and have to come back. A higher charge if you want to make an appointment and avoid the lines.
2- the federal mileage tax, which would be shown as each drivers' share of the costs of the roads.

Then, at the gas pump, install stickers that detail the various taxes on the cost of the gasoline. Possibly with a chart that shows the per mile costs at a couple of different MPG levels.

This would, I think, have the following effects:

1- conservation at all levels- the fewer miles you drive, the less resources you use up and the less it costs you.

1b- a removal of the tragedy of the commons problem with the roads. When a resource seems free, people tend to overuse it.

2- openness- drivers will have real data that shows how their behavior/needs cost society and thus themselves money. If I believe I need to drive a lot of miles or need a large, low MPG vehicle, I can see what that costs me. Perhaps I can see that all the driving I do really IS worth the extra $200 it costs me a year. Or I can see that it isn't.

3- efficiencies in government services/requirements. Why should we waste everyone's time and tax dollars having multiple places one needs to go every year, when we can have one place that does everything in less time?

4- this would also, I'd imagine, have a stimulating effect on the automobile makers. when people see that the '83 Lincoln they are driving around costs them extra money, they might decide to buy a more efficient car. Further, if this has the effect of the states mandating safety checks where they didn't have them before, it would increase the overall safety level of the vehicles on the roads, and encourage people to maintain their damned cars...

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