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Oregon launching new program to tax drivers per mile

 

Oregon is moving ahead with a controversial plan to tax motorists based on the number of miles they drive as opposed to the amount of fuel they consume, raising myriad concerns about cost and privacy.

The program, springing out of a recently signed bill, is expected to launch in 2015 on a volunteer basis. But it’s charting relatively new territory, and other states aching for additional tax revenue are sure to be watching closely to see whether to imitate the model.

The problem for lawmakers is that the existing per-gallon gas tax has hit a point of diminishing returns, as Americans drive less and vehicles become more fuel efficient. The federal Highway Trust Fund, which gives money to states for highway construction and repairs, for example, has needed a congressional bailout four times since 2009, in part the result of no federal gas tax increase in the past 20 years.

However, economists and civil libertarians are concerned about the Oregon pilot project in large part because some mileage meters can track and record residents’ every vehicular move.

Rick Geddes, a Cornell University professor, said the basic device is okay because it is simply attached to a vehicle’s computer, which cannot track locations.

“It’s just like using electricity,” he told FoxNews.com

However, Geddes said privacy concerns could resurface should governments expand the program and use SmartPhone or apps to track movements and reward motorists who avoid congested roads and drive during off-peak hours.

Mark Perry, a University of Michigan scholar, says the GPS or “black box” system is "particularly untenable.”

“It would force us to surrender our privacy,” Perry, a scholar at the conservative think tank American Enterprise Institute, recently wrote in a column for McClatchy Newspapers. “Each day more and more of us are required to tell government agencies more and more about ourselves. Do we really want the government collecting data about driving habits?”

Another concern is the cost of tracking devices -- including who pays and how deep the expense cuts into the tax coffers.

Oregon is purportedly considering several tracking methods for the pilot project’s 5,000 volunteers ahead of the 2015 start date – essentially allowing them to install mileage meters connected their vehicles’ odometers or GPS systems that could better track non-taxable miles on private and out-of-state roads.

The average cost of GPS is now about $200.

And a 2012 Government Accountability Office report states the costs of a GPS system for 230 million U.S. passenger vehicles “is likely to greatly exceed the costs of collecting fuel taxes,” absent any reliable studies on the issue.

The report also acknowledges such a method would be “more equitable” for drivers but also points out the “privacy concerns.”

Critics also say state governments calculating the tax per mile and mailing bills is another cost, and that people who use the most gas-efficient vehicles could pay just as much as those owning gas-guzzlers.

The Oregon plan -- approved and signed into law this year by the state’s Democrat-run government -- would replace the 30-cents-a-gallon state tax with one for 1.5 cents a mile, for those participating.

A state spokeswoman said Monday that the project is still in the development stages with officials focused on public awareness, not registration.

Still, she acknowledge residents with electric cars, who pay no gas taxes, “won’t be running to sign up.”

The incentive for states to pursue this kind of program could build as cars become more fuel efficient, especially considering President Obama wants new vehicles to get 54.5 mpg by 2025, up from the average now of 23.5 mpg’s.

Motorists will still be charged the federal tax under the Oregon program.

At least a dozen other states have had similar but smaller pilot programs. Oregon has had at least two other test programs, but this one is the most expansive.  

Gebbes acknowledges officials are stuck in a “what to do next” situation regarding changes to the outdated system and moving closer to a “user fee” system.

Congress and state governments rarely have the appetite to raise taxes – with the exception of perhaps Virginia, which this year through some creative changes to the state gas tax will generate a projected $880 million a year for road projects.