Gasoline Tax to go up 50%?

I’ve railed on and on about this in conversation, but apparently the only place I’ve mentioned it on MO was in this comment on the post about Fulton County awarding water conservation with a rate increase.

Motorists’ habits spur call for tax increases

WASHINGTON – Motorists are driving less and buying less gasoline, which means fuel taxes aren’t raising enough money to keep pace with the cost of road, bridge and transit programs.

A federal commission created by Congress to find a way to make up the growing revenue shortfall in the program that funds highway repairs and construction is talking about increasing federal gas and diesel taxes.

A roughly 50 percent increase in gasoline and diesel fuel taxes is being urged by the commission until the government devises another way for motorists to pay for using public roads.

The commission will also recommend that states raise their own gasoline taxes and increase the use of toll roads.

But since the future seems to be filled with ever-increasing fuel efficiency, the long term plan apparently involves equipping all vehicles with GPS devices so that the government can charge you for how man miles you drive.

Seriously.

Via Jeff Soyer.

UPDATE: While posting at GunPundit, I realized that the GPS thing might be the diversion to keep us from looking at the tax increase.

Comments

  1. As Murdoc knows……….many of the roads in MI are certainly in a sad state. Though whether that’s due to a revenue shortfall or some other cause, such as our State Government frittering away road maintenance funds on other things; I don’t know. There’s no question in my mind; a large part of the problem is our State and County Governments having paved far too much over the last 40 years, with little or no thought of up keep. There are way too many roads in my area of the State that used to be graded gravel and are now paved. And, if you pave it; you’ve got to maintain it eventually, and the more you have to maintain, the less there is to spend on heavily used main roads and other infrastructure (bridges and such).

    It is ironic though; that many of the same eco nazi’s in Government; who relentlessly push fuel economy and conservation are among the first (in my warped perception) to want to raise taxes and a reward for conserving as they shrilled.

  2. the need to modify the law to say what ever gas tax money is collected that the only use for it is roads, I think if you look at where the gas tax money has gone is to other items in state/federal budgets (bike trails, mass transit).

    PA is trying to turn I-80 into a toll rode, an privatize I76(PA turnpike). they say to maintain the roads, state that have them have found that toll roads are a cash cow, see NY Thruway, the Erie Canal is under the NY State Thruway Authority and they use toll money to maintain the canal.

  3. Putting tolls on a Federal Highway? I assume they will be paying me back for my tax dollars used to build the road.

    NJ tried the same thing on 78 and 80 – the feds laughed at them. Michigan, like NJ, probably directs it’s funding to union only contractors who paid off a bunch of politicians so they could charge 3 times the normal rate for shoddy work.

  4. The GPS or other tracking system is absolutely not a diversion. I’ve studied this issue a bit on my day job. There is a real problem coming down the road (so to speak), and highway tax people have seen the writing on the wall: their source of revenue will soon be going down, and probably big time. With increases in efficiency, the move to hybrids and pure electric vehicles, and various other “green” efforts, the volume of gas & diesel sold is dropping and will continue to drop. And along with each drop goes an equal drop in highway funding revenues.

    The recent drop we saw due to lower demand from high fuel prices and the recession didn’t help either. It opened some eyes. On the plus side, in theory at least, a drop in demand caused by less driving should lead to lower highway maintenance costs. But with the increases in efficiency, that’s not the case. So we end up with the same amount of wear and tear on the roads, or demand for new roads, but with less income from fuel taxes to cover the costs. That is a real problem.

    Yes, they could make do with less for a while (like that’s going to happen). But longer term, they need to look for ways to replace the lost cash. Now, I’m as anti-tax as the next guy (probably more so), but I do think that this is a pretty good use of tax dollars, as long as highway taxes are used for highways. So after my initial knee jerk reaction, I’m not completely opposed to a tax increase here. I might sound like a politician, but it’s really not an increase. It’s just an attempt to get back to the level we were at before.

    The quickest and easiest way to get back to previous levels is to jack up the per gallon tax. On the one hand, this would “reward” people who are being more efficient. On the other hand, it would also drive people to become even more efficient. That’s probably a good thing for us all long term, but it also leads to even more decreases in road revenues in the future. Which means taxes would need to be raised again at some point, etc, etc, etc.

    Over time with the per gallon approach, the taxes become more and more decoupled from the amount of miles driven. And that’s not a good thing. So that brings us to an attempt to somehow tie the amount of taxes paid to the actual miles driven. And ideally, this approach needs to be equally effective with EV’s and hybrids.

    There are some low tech solutions to this. One possibility would be to base a tax on an annual odometer reading (which happens in many states already). But that could result in a pretty big, once a year tax hit. And all good government wonks know that the best taxes are paid regularly, in small installments, and automatically. And with all this high tech stuff we have now a days, there surely ought to be a way to pull that off, right? So we have folks talking about this GPS stuff.

    Personally, I am scared to death by the GPS based approach, and I think we all should be. Another option is something like the EasyPass and similar automated toll collection systems. They are a tiny bit less threatening from a privacy standpoint. But still, if you get enough reading stations set up to be effective for something like this, the potential downside won’t be too different from a GPS based system.

    Bottom line, something is likely to change with the way we handle highway funding. So you can expect to see a lot of goofy ideas floated over the next few years. Please pay attention, and don’t be afraid to make your voices heard.

  5. Look to Britain for how this gets done. A governor for your car if you speed. You get taxed for where you go, and by necessity there is a little file on you and all your visits. If ever there was a Big Brother, this is it. You might as well wear one of those tracer bracelets on your ankle.

    It sounds like Jerome went off the deep end, but if your car gets a GPS then what of what is said here is not true?

  6. Tax tires, if you must tax anything.

    No GPS required. A mile is a mile is a mile regardless of how fuel efficient the vehicle is, so you don’t penalize fuel efficiency nor do you have a negative tax incentive with fuel efficiency. You have a sliding scale based on treadwear rating, so you pay less for driving fewer miles, but do it more often. And the tax is less noticeable in that infrequent interval (maybe once a year to once every 5 years depending on tires and driving habits).

  7. If they just tax tires (and they already do, btw) you could get hit with an even a bigger one time bill than an annual mileage charge. That could end up being something like $2000-$3000 for a set tires after 4-5 years. I don’t think that would fly.

    And that would no doubt discourage people from changing tires. I don’t think that’s a good thing either, at least safety wise.

  8. Not that bad, but it is an increase. If you assume current federal gas taxes ($0.184 per gallon), 25mpg, and a 50000-mile set of tires, the equivalent gas tax cost would be about another $370 on a set of four tires every 50,000 miles. If that’s offset by the elimination of the federal tax, you really break even (though if that is done, then folks with more efficient vehicles are actually being taxed more, since they’d use less gas and thus pay less per-gallon but would pay the flat per-mileage rate on tires).

    Yes, it would encourage people to go longer between replacing tires which would mean some folks would operate on unsafe tires. Maybe existing state inspections (for those states that do it) would catch them; maybe Darwin would thin the herd out a bit. The point is, there are more solutions out there that can be directly tied to road usage that aren’t the schemes thus far proposed.

  9. You all are missing the boat. There should be no need to raise taxes at all. Simply shift the available funds from one area that is doing fine to the areas that are not, and cut whatever needs cutting to complete the zero-sum balance.

    Start by a 10% across the board cut of ALL state employees. That ought to free up a pretty good chunk of change. Next, prohibit any form of welfare assistance, either housing vouchers, food stamps, medicaid, whatever, from being given to illegals. Anyone applying for state aid of any sorts must show proof of US Citizenship. THAT, too, ought to give you the rest of the money you need.

    Lastly, privatize the school systems. The public schools have proven beyond doubt that they are incapable of accomplishing anything beyond sucking budgets dry. The cities should put the school systems out to bid, with successful bidders paid via a half up front, remainder upon students passing state-approved educational requirements. Pay per student, with pay being withheld for drop outs, failing courses, etc.

    I think that, with just these three areas, sufficient income can be located to take care of any and all infrastructure needs.

    Respects,

  10. Tim,

    I agree in principle, but like I said, that just ain’t going to happen any time soon.

    Hawk,

    Hawk,

    Your math is good, but I think you’re off on the taxes a bit. I was figuring about $.50 per gallon as an average tax. Don’t forget, a bunch of the highway money comes from (and goes to) the states. Current average is .48 for gas, .53 for diesel. I got that number here:

    http://www.api.org/statistics/fueltaxes/

    And I was ball parking my own F-150 4X4 and Mustang GT. The truck averages 16.5 Mpg. And I get about 20k miles out of the tires max, no matter what they are rated. So I’m not sure how to account for that. The Mustang gets about 21 Mpg, but I haven’t replaced the tires yet. I’m expecting maybe 15k max out of them. The rears are going fast…..

  11. This story is a proposal to increase federal gasoline tax, which is 18.4 cents per gallon.

    The story also notes that the commission is calling on states to increase their own gas taxes in addition to any federal increase. Plus more toll roads.

  12. Murdoc,

    Yes, that’s true of the story you linked to. But some states were already looking into this stuff too. I was talking to folks in PA, CA, and MA almost a year ago. The automotive people are tinkering with it too.

    I’m an electrical engineer with nothing to do with the fuel or transportation industries, but my boss wanted me to look into it for possible long term business potential from the electronics side.

  13. Jaymaster –

    Man, you’ve got a lead foot! My Accord (avg 32 mpg) is at 50k and easily has another 10k left in its first set of tires (the S2000 is another story as it needs new tires at 11k, but that’s track days for you). As Murdoc pointed out, I only did the federal calculation because that was the point of the story.

    And I agree — no real reason to raise taxes if local and federal governments would be wiser with how they spend their money.

  14. Hawk,

    I do have a lead foot. And I feel guilty a couple times a year. But I get over it….

    That’s also one reason I like the idea of the current tax structure. Yes, I do more damage to the roads than most people, but I pay more road taxes than most people too. There aren’t many taxes that work that way.

  15. Hey! My Kawasaki ZX 14 is a flex fuel vehicle! It burns gas………….. and rubber! I average 36.8 mpg, and 3500 miles per rear tire. How’s that for green frugality? LOL!

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