Friday, January 11, 2013

Congress Urged to Impose New Mileage-Based Tax to Pay for Road Repairs

Here’s a conundrum: the government is hell-bent on reducing the average fuel consumption, and thus CO2 emissions, of new vehicles. It’s even offering federal tax incentives to buyers who choose to go “green”, i.e. hybrids or all-electrics.

It follows that, lowering fuel consumption, means lower income from federal gas taxes that have remained the same since 1993. Without new sources of revenue, the Congressional Budget Office estimated last August that the Highway Trust Fund will need at least US$110 million in funding for road repairs.

Ah, but government officials are already taking care of that.

According to The Detroit News, the Government Accountability Office suggests a mileage-based user fee program, which would impose a tax on vehicle miles traveled.

The GAO claims that commercial truck user fees imposed in Germany and New Zealand have resulted in increased tax income and reduced road damage and it urges the Congress to institute a pilot program.

“Without a federal pilot program to evaluate options to more accurately charge commercial trucks and electric vehicles for their road use and the costs and benefits of such systems, Congress lacks critical information to assess whether mileage fees for these vehicles could be a viable an cost-effective tool to help address the nation’s surface transportation funding challenges”, said the GAO.

In order to cover the shortage of funds, the driver of a vehicle with an average fuel efficiency would have to pay from $108 to $248 per year in mileage fees, compared to the US$96 someone pays today in gas taxes.

The GAO has a Plan B, too, in case the mileage-based tax doesn’t get through: increase gas tax from the current 18.4 to 31.6-46.6 cents per gallon.

As the old saying goes, there's no such thing as a free lunch - not even a "green" one...

By Andrew Tsaousis

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