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Fuel Efficiency and Mileage Based Taxes

An interesting artice in the WaPo caught my eye this morning. The headline “LaHood talks of Mileage-Based Tax” made me wonder if they were actually suggesting a tax per mile you drive. As it turns out, they were. But oddly, that’s not the interesting part of the story.

In the interview, he also ruled out raising the gas tax, the primary source of transportation funding…

Revenue from gas taxes is becoming problematic as cash-strapped Americans drive less and buy more fuel-efficient cars, leaving the government with a growing hole in funds to pay for the nation’s aging highway system.

Until recently, the 18.4-cent-a-gallon federal gas tax had been a steady and growing pot of revenue. Over the past half-century, it has paid for the interstate highway system, which has crisscrossed the nation with asphalt, and since 1982, it has been kicking in for transit needs…

The current system also assumes that Americans will drive more every year. And for many years that was true, with miles traveled increasing about 3 percent a year, Basso said. But when gasoline prices hit $4 a gallon last year, people began driving less. According to AAA, Americans drove 107.9 billion fewer miles in 2008 than in 2007.

Apparently, that combined with advances in fuel efficiency have led to declining revenue for transportation projects – an unintended consequence of greening our automobiles.

In what may be the shortest flight ever of a trial balloon, the government immediately shot down the idea of the mileage tax. However, there have already been pilot projects to test the idea.

As an Oregon DOT spokesman said, “[G]as-powered vehicles are going away. When that point comes, how do you collect money for your transportation system if your revenues are based on gasoline?”

Only in the final two paragraphs do they even raise the privacy concerns about this – namely the government tracking the movement of its citizens.

I suspect that the police – now aware of the lengthy record of your travels – would demand access to the data to track the movement of suspects (or “people of interest” or… well, you get it.

It is frightening to think of the implications. But it is interesting to see that while the previous administration wanted to violate our freedom for the purpose of homeland security, this one may do it just for the tax revenue.

Written by Michael Turk