There is increasing talk of creating a new tax; the mileage tax. This is a tax that would tax vehicles based on the number of miles driven. The idea is that this would provide a new source of funding to build highways. It has been pushed by most of the major auto magazines, and is popular with many rank and file conservatives; although to be fair not many Republican elected officials as of yet.
The basic argument behind the mileage tax is that gas tax revenues are falling because gas consumption in the U.S. is plummeting. This is not really true. Gasoline consumption rose from 2000-2007, it fell in 2008, 2011, and was basically flat in 2009, 2010. This means that gas consumption fell when the economy declined, and will in all likelihood rise when the economy recovers. A typical conservative argument is that the rise of hybrid cars has led to drivers of these cars driving on the roads without paying their fair share of gas taxes. I live in a pretty liberal, environmentally conscious area and I think one in about every 200 cars I see is a Prius. I doubt the existence of the small number of these cars has led to a decrease in gas tax revenue. The real reason gas tax revenues have decrease is that many states delinked gas taxes from gas prices or have cut gas taxes. Tax cuts mean less revenue.
The real purpose of a mileage tax is to punish those who purchase fuel efficient vehicles. This is a major government intrusion into the market. Gas taxes do have an effect on the market by discouraging the purchase of high consumption vehicles. This is not the policy reason behind the gas tax; its original purpose was to provide road funding and later to discourage consumption of imported oil. The sole purpose of mileage tax is to make gas guzzlers more competitive in the market. The mileage tax also runs counter to our national policy of energy independence by encouraging consumption of gasoline over other fuels.
The largest problem with the mileage tax is that it will require an entire new bureaucracy to collect it. It would require putting a GPS in everyone’s car (that will be popular) or building a series of check stations so the people could stop in once a year to have their mileage read. Either system will eat up most of the new revenue. We could use existing driver’s license facilities to charge vehicles an annual tax based on the vehicles proven fuel consumption without having to take the time to go check the mileage. I do not relish the idea of standing in the DMV waiting for them to go out and check everyone’s mileage.