Mileage-tax proposal stirs debate (Contra Costa Times)

By Denis Cuff
Contra Costa Times
March 22, 2009

Concord motorist Weeda Mojadedi agrees the nation's bumpy, pocked roads and freeways need fixing, but she said she doubts that imposing a new tax based on miles driven rather than gas consumed is the way to pay for it.

"A mileage tax sounds too complicated. There are a lot of ifs," the office receptionist said during a recent stop at a service station. "If the problem is they don't have enough money for roads, why don't they raise the gas tax? Then again, I worry about government taking more money from us."

The United States has relied on a per-gallon gasoline tax to pay for upkeep of roads and bridges since 1932.

But Congress has not raised the gas tax of 18.4 cents per gallon since 1993, letting inflation erode its buying power by more than 20 percent.

So, with gas tax revenues flattening out and even declining slightly as Americans drive less and move to more fuel-efficient vehicles, the notion of switching to a tax based on miles driven is picking up steam in Congress and elsewhere.

Supporters say a mileage tax would provide a reliable, long-term source of transportation funding.

"With the expected shift to more fuel-efficient vehicles, it will be increasingly difficult to rely on the gas tax to raise the funds needed to improve — let alone maintain — our nation's transportation infrastructure," said Robert Atkinson, chairman of the National Surface Transportation Infrastructure Financing Commission.

Congress has fretted for two years that its Federal Highway Trust Fund, a key source of road and bridge funds, is struggling to stay solvent.

For years, motorists effectively offset inflation's toll on gas tax revenue by driving more and buying more fuel, but the fuel binge is drying up. California gasoline purchases leveled out in 2007 and dropped about 12 percent to 13.8 billion gallons in 2008.

There is no single plan for a mileage tax, nor pending legislation to spell out details on how much to charge or how to collect it.

Experts say the mileage tax might be collected at the gas pump — much like the current gas tax — if cars were equipped with mileage-counting computer chips that could relay the information to gas pump computers

U.S. Sen. Barbara Boxer, D-Calif., and Rep. James Oberstar, D-Minn. — who head key transportation committees — have each said they want the federal government to study the mileage tax as a long-term way to pay for infrastructure. Boxer called it a "brilliant" idea.

Some environmentalists back the mileage tax as a way to encourage less driving, congestion and pollution.

Transportation Secretary Ray LaHood, said last month that he wanted to look into a mileage tax as a way of "thinking outside the box on how we fund our infrastructure in America." But the next day, the White House reined in the Cabinet member by issuing a statement that a mileage tax "is not and will not be a policy of the Obama administration."

Polls show motorists aren't eager to pay higher gas taxes, or back any measure that might raise them.

Critics say a mileage tax would be too unwieldy to collect, too intrusive on consumers and too big a deterrent to use fuel-efficient vehicles.

Under the current fuel tax, motorists have an incentive to buy fuel-efficient vehicles. But a mileage tax would undermine that incentive if Hummer owners were taxed at the same rate as hybrid owners, said Severin Borenstein, director of the UC Berkeley Energy Institute.

"If you just need a stable source of (transportation) funds, you could raise the gas tax" instead, he said.

It would be more effective, he suggested, to impose a carbon tax based on vehicle pollution, or levy a congestion fee, making motorists pay more to use freeways during rush hours.

State Assemblywoman Nancy Skinner, D-Berkeley, said she worries that a mileage tax would put an unfair burden on people who drive long distances to work because of shortages of affordable housing near employment centers.

But defenders of the mileage tax say the charge could be structured to avoid potential pitfalls.

A tiered mileage tax could be created so that gas-guzzler owners pay a higher per-mile tax than owners of fuel-efficient vehicles, said Deron Lovass, transportation policy director for the Natural Resources Defense Council.

To offset the potential burden on low-income people, mileage tax revenue could be spent to improve public transit that low-income residents could ride to jobs or school, Lovass said.

He said the privacy concerns can be addressed by encrypting drivers' mileage information. "While there are valid concerns, we believe they can all be trumped by smart and effective program design," Lovass said.

State Sen. Mark DeSaulnier, D-Concord, said he thinks public reaction to a mileage tax might warm up over time.

"I don't think the country is ready right now for a mileage tax," he said, "but we need to look at new ideas to take care of our transportation system."