California mileage tax a bad approach

Published on Sunday, 11 May 2014 22:06 - Written by

There’s an old saying that should give us pause: “As goes California, so goes the nation.” It’s a reference to the policy experimentation and political trends that seem to start in California and spread elsewhere.

Last week, California lawmakers proposed a new plan to help pay for roads that would tax vehicles for each mile driven.

Such a tax has been a long time coming — since the 1970s, cars and trucks have gotten better mileage, and more recently, technological advances have allowed us to drive less to get our business done. These trends have meant that fuel tax revenues have dropped, even as our infrastructure needs have risen.

Texas is facing the same problem, but should look for a different solution.

“The California Legislature is looking at a voluntary program that would tax motorists for every mile they drive,” reported KCLA9, a Los Angeles CBS affiliate. “Sen. Mark DeSaulnier, D-Concord, introduced a bill to test out the vehicle miles traveled (VMT) tax because the state’s gas tax was no longer bringing in the revenue it used to due to people driving more fuel efficient vehicles. The program is modeled after ones in Oregon and Washington.”

Californians see the obvious problems with such a tax.

First, there’s a privacy issue. If the state is going to tax drivers for every mile driven, the state must know about every mile driven. That means tracking devices in Californian cars. Understandably, that makes a lot of people nervous. When San Francisco’s Metropolitan Transportation Commission proposed a similar system, it was forced to assure the public that “We’re not interested in where they go. We’re only interested in the amount they travel.”

Another problem is the money that owners of electric vehicles now save by not buying gas. Those savings are an important — often decisive — factor in why people buy electric. If you take that away (by charging them the same per-mile fee), then the higher up-front costs of buying electric no longer make sense. So even environmental groups that support higher taxes on driving (to discourage it) won’t support vehicle miles traveled (VMT) taxes because they’ll hurt the sales of electric vehicles.

Alongside the VMT tax proposal is one made by the Obama administration last week, which would allow states to charge tolls on already-built interstate highways. Transportation Secretary Anthony Foxx wants “to allow more states to choose to make broader use of tolling, to have that option available.”

That, too, is a bad idea.

But there’s a better one. The current fuel tax can be indexed to inflation.

“A simple approach would be to replace the per-gallon tax with a percentage-based sales tax,” the Wall Street Journal reported. “Several states, including Indiana and Georgia, already supplement their motor-fuels tax with a sales tax. A 2009 study of transportation-funding alternatives estimated that a federal sales tax of 1 percent on gasoline could raise about $7.2 billion of revenue a year, based on gas prices of $4 a gallon.”

This is a better approach than the one being explored by California.