Heard a very interesting story on NPR today.

Oregon is testing a "GPS" system for calculating gas taxes.

Instead of taxing everyone "equally" by charging Hummer drivers the same gas tax at the pump as Hybrid drivers, they are going experimenting with a system that will tax "based on miles driven" in particular areas. They have setup "GPS Zones" and every mile driven in a particular ZONE is calculated, then when at the pump, their is a wireless system which reads your Zone info and taxes you accordingly.

For example, if you drive during rush hour on the freeways, which are more expensive to maintain because of the high volume of traffic and required repairs, then you pay MORE gas tax at the pump.

If you drive in rural areas, you pay LESS because those roads are used less, thus are less costly to repair.

I think it is a VERY COOL idea. Tax the people more who use the more expensive roads more often, and tax the people LESS who use the less expensive roads. Makes perfect sense to me.

 

It seems interesting but I don't see how that would tax hybrid drivers less than hummer drivers. That happens now because hummer drivers use much more gas.

 

You are correct - that does not tax people more or less because of what vehicle they use. I was just commenting on how "right now" it DOES do that - i.e., hybrids pay the same gas tax as hummers, which is not fair.

This new plan makes it fair across the board by charging on type of use, not type of vehicle.

 

Shouldnt it also be affected by vehicle weight? Heavier vehicles are more damaging to the roads.

 

They might eventually (or may even be now) consider that as a criteria. But realistically, how much more damage does a 6,000 pound truck physically do to a road than a 3,000 pound car? I'd guess it's probably pretty minimal, considering a road that is properly maintained and constructed.

Now, in regards to ENVIRONMENTAL DAMAGE, then you have a whole 'nother ballgame !!!

 

I've always felt it unfair that an H2 owner pays the same amount for gas that I do. H2s are nothing more than sheer status symbols, as are other vehicles such as the Excursions. People will always want gas guzzlers because they don't feel it in their wallets.

The only way to get rid of gas guzzlers is to hit the owners where it hurts most -- their wallets.

 

Let's see here. Oregon already has one of the most sagging economies in the Pacific Northwest. Eastern Oregon is a backward wasteland where people actually live without connections to phone or electricity, however many manage with solar power of some sort. Oregon has more government interference with people's every day lives than probably any of the remaining PNW states. Now it isn't enough to charge a tax on gas per gallon, but they now want to charge it per mile.

Let's see why this isn't going to work.

1. Complexity.

The less complex a tax is to collect, the less the overhead there is to collect it. The last thing you want is overhead to eat into a tax revenue source. The less efficient a tax collection method the less useful it is to the taxing entity. Equipping Oregon drivers with GPS units designed to assess tax at the pump is going to be expensive and technically difficult, along with certain ways to defeat the devices. Sure government can mandate that GPS devices be placed on cars at buyer cost, but that is not citizen friendly, and definitely will have an impact on vehicle sales. And you can mandate that fuel dealers place receivers on their pumps and buy pumps that will assess tax based on what the GPS unit tells them, however that isn't business friendly, potentially sending some fuel dealers out of business. What about travelers and tourists? Will Oregon hand out a GPS tax calculation unit at the "checkpoint" into the state from their neighboring states? I wouldn't be surprised if there is some constitutional law there that may relate to interstate trade laws and laws surrounding what you can ask of non-citizens of Oregon.

2. Gas taxes are not collected and distributed specifically to road maintenance.

Nearly every state has taken its gas tax and over the years diverted significant sums of it into general funds and funds that do not service road projects and road maintenance. As a general rule, I think most states are lucky if 25% of their gas taxes actually end up as pavement. The rest gets whittled away into other things, usually totally unrelated to pavement. This complicates Oregon's gas tax proposal. So, now they want to try to tax per mile and by zone, but only a fraction of the funds collected will actually go into pavement and improvements in those zones. I don't see Oregon scrapping the current distribution of gas taxes collected so that this system works as it should, miles driven = taxes collects = direct funding to DOT. That just isn't going to happen.

3. Market impact

State legislatures are rarely cognizant of the impact of their tax decisions. They just look at the revenue stream that they want and go after it by any means they see fit. However, taxes have a very negative effect on economies in general. The lower your taxes, the stronger your economy. The higher your taxes, the weaker your economy. GNP/GDP = Ix + Cx + G - Tx. It has been many years since I took Macroeconomics, however I recall this equation as a good explanation of what taxes do to an economy and the impact of government spending. x is the multiplying factor in an economy or economic system. In the U.S. It is a regional issue. I is industrial consumption, C is consumer consumption, G is government spending and T is taxes. Without using numbers, we can see that I and C have both additive and multiplicative effects on an economy. Both are strongly positive. G (government spending) is only additive. It has no multiplicative effect. Taxes have a multiplicative and negative effect on an economy, reducing wealth. Now, with all of this said, the formula basically states that Private sector spending and investment have a strong positive effect on an economy; government spending is positive, however not strong and taxation reduces the ability of the private sector to create wealth.

So, here is Oregon, basically being greedy and continuing to believe that government comes first, when in Macroeconomic terms and what plays out in real economies, government needs to come last, do less and impede business and individuals with less taxes and fewer punitive and senseless regulations.

 

Hi JeromeP:

___Nicely written …

___I have read in the past that road damage is proportional to the 4th power of GVWR. Although I never bookmarked the study, it says truck traffic no matter how many wheels in the running gear are far more damaging to roads then an Insight, HCH, or Prius I/II. Oregon is only looking at this as a tax grab I am quite positive. It won’t be long and Oregon will emulate fortress Europe w/ $6.00 a gallon for fuel or the equivalent given the tax and no one will drive anywhere … Sounds like I won’t be moving to that state anytime soon Given your location, doesn’t Oregon have some kind of law that you cannot fill your own fuel tank? Just passing on rumor and innuendo if this is not the case.

___Good Luck

___Wayne R. Gerdes
___Hunt Club Farms Landscaping Ltd.
___Waynegerdes@earthlink.net

 

I'm not absolving Washington State of not having some screwy tax code (and we are overtaxed in numerous areas), but as a sales tax state, at least we know where we are going to pay our tax and don't get hit with an income tax on top of sales tax. The unfortunate thing with that is that in some areas we have a sales tax approaching 10%. Consider that the base state sales tax is either 6% or 7% and anything above that are taxes that get remitted to counties, cities and public transit authorities. So, lots of very local governments have plenty of funding coming in from sales taxes.

Sales taxes are usually very low overhead. Businesses collect the tax when they make a sale and then remit it on a monthly or quarterly basis to the Department of Revenue. It is very low overhead, and hard to screw up. Washington State DOR is much smaller than the respective PNW states DORs because our tax collection comes from businesses exclusively, and rarely includes individuals. As soon as a state starts to collect tax via income, then the overhead required to collect it becomes a bureaucracy in and of itself. This goes back to overhead in tax collecting eating up the revenue before it ever gets to its final destination.

The same general policy applies to per gallon taxing of gas. Low overhead, merchant driven, low number of contacts to collect from. Washington State probably has the highest gas tax in the nation. And if not we are probably 2nd or 3rd. I'm not a happy camper about that because only about 15-20% of our gas tax actually ends up in pavement and improvements. The rest goes into the black hole of the general fund. I can't help but imaging how independent our DOT would be if they got all of the gas tax. Our roads would ideally be well maintained and intersection and highway improvements would just happen. If that were the case I wouldn't mind the gas tax so much.

You're right about trucks. They do indeed do the most damage, but this goes back to what is done with gas taxes. Truckers and trucking companies pay fuel tax also. Considering how grand the scale of gas taxes is, you'd think that with all that revenue coming in, if they were to take 100% of it and turn it into pavement and traffic flow improvements, nobody would be talking about the damage trucks do to the roads because the roads would be being repaired with the funds that all of us are paying in gas taxes.

About Oregon:

Living in a state that boarders Oregon I can confirm that they do indeed prevent you from pumping your own gas. I'm not sure why, I've heard only rumors, but rumors sometimes are true. By having station attendants pump gas the state is artificially creating service sector jobs that ideally anyone can do. Pumping gas is an unnecessary and otherwise phased out job in the rest of the nation. How much this reduces the unemployment rate state wide, well, I can't help but question its impact. I do know that it increases fuel prices.

Oregon is very liberal, I think more so than Washington which is suffering from a liberal lapse of common sense right now. Consider that Oregon has used their tax code to influence people's behaviors. The fed has done it, so have other states. There isn't a government entity which hasn't used the tax code to influence people's behavior. The point is, the more you do it, the more you start to look like "Fortress Europe". And the less independent and productive your citizens are and the less vibrant your economy. It is a vicious circle that I hope states figure out sooner rather than later. Tax code should be used to collect the bare minimum of funds necessary to provide the barest minimum of services, or rather instead of services, infrastructural maintenance and improvements.

For those of you that don't agree keep this in mind. The higher your fuel taxes are, meaning higher fuel prices are as compared to other areas or indexes, the fewer discretionary miles people will drive. Meaning, that travel outside of what is absolutely necessary, such as pleasure trips, goes way down. This happened when fuel prices were going up and up over the past couple of years, and that is what happened when Washington's gas tax went up another $.05 last year.

 

Road wear is generally represented as the square of vehicle weight. A 6000 pound vehicle will do 4x as much wear on the road surface as a 3000 pound vehicle. All of this pales in comparison to when a 60,000 pound cement mixer rolls through, but then again, the overwhelming majority of vehicles on commuting roads are passenger vehicles between 2000 and 7000 pounds.

The bottom line is I think this is a bad idea. If they're hurting for tax revenue then RAISE THE GAS TAX!! Gasoline is getting far more expensive these days anyway so when gas is $2/gal instead of the $1/gal it was 5 years ago, raising it 10 cents is only half as much of a price increase in percentage as it would have been back then. Raising the price of fuel will motivate people to buy vehicles that get better gas mileage, and those vehicles tend to be lighter anyway.

Not to beat a dead horse here, but the other big advantage of the gas tax is that it's super low tech, meaning it costs virtually nothing to implement a tax increase. Compare that to the HUGE costs of setting up a super high tech GPS tracking system that's going to be prone to errors, server crashes, and hacking to avoid taxes. There's no way to cheat at paying the pump tax though; at least not that any significant number of people would ever attempt. Raising the gas tax is the way to go.