The state of Oregon is considering the introduction of a tax on every mile driven by fuel-efficient cars. Their reasoning is that gas tax revenue has decreased, and this is a way to increase the funding available for road maintenance.
The gas tax in Oregon is 30 cents per gallon, and instead of increasing it, they are considering using a per-mile tax, of which the revenue should be sustained longer for the following reasons:
- Vehicles are becoming more fuel-efficient with each new model, so the drivers have to buy less gas, and less gas purchases = lower tax revenue;
- More hybrid vehicles are on the market, and there is a gradual shift to them.
- Older, less fuel-efficient vehicles are being retired as they become too tired, reducing the number of gas-guzzlers on the road. Gas guzzlers generate the most gas tax revenue because the most gas has to be purchased for them;
- Since this gas tax is not calculated as a percentage of gas bills, but rather a fixed 30 cents per gallon, a tax on every mile driven would be immune to gas price decreases, and, since gas price decreases cause some people to drive more, that might cause a net increase in per-mile tax revenue since there would be more miles driven.
An alternatives that will keep gas tax revenue increasing with inflation and gas prices increases is a gas tax that is a percentage of peoples’ gas bills. Every time the price of gas goes up, and every time inflation occurs, gas tax revenue would automatically increase.
This approach makes cars overall less attractive, and might encourage more cycling and transportation by foot, which is very energy-efficient and good for public health.
There are, however, some drawbacks.
- There is a struggle to encourage the adoption of not only hybrid and electric vehicles, but smaller, and more fuel-efficient cars. As an alternative, a percentage-based gas tax like the one mentioned above would make smaller, and more efficient cars more attractive, while SUVs, old cars, and large luxury and sports cars become less attractive, shifting sales towards the former to a limited extent.
- This provides no incentive for the purchase of more fuel-efficient cars, or for hypermiling.