1.5 cents per mile instead of gasoline tax

Wow!

Did they send it all to you in one check? Or did it come via one check per month?


Mike

 

Why couldn't they accept quarterly payments like you do for federal income tax estimates? Still less costly than a device in your car.

I must have missed that in econ class. Why would a tax RATE need to change to cover inflation?

You are assuming a poorly designed system.
Imagine that it is implemented more efficiently. To start with, just assume everyone drives, say, 10, 12 or 15K miles per year and you send out a bill, with the normal registration that "guesses" this many miles. The car owner can just choose to pay this much (and maybe elect quarterly payments for the mileage portion). Now assume that you drive much fewer miles...you can choose to go to the DMV or any certified car repair location, get a reading, send it in and pay less. Now assume you drive more miles. You just enter the number and pay accordingly.
Cheating is prevented by requiring a reading when the car is sold and maybe every N number of years, where N is something like 6 or 10 years.

With this scheme the DMV workload is probably close to zero. At a minimum it is less than 10% as much as you envisioned. Note that car repair location will probably be glad to do the odometer reading for free because it might get you to come to their shop.

Mike

 

What happens when you drive to Florida to go to Disney World?

Mike

 

quite simple the cost of building and maintaining roads go up in time as materials and labor go up in price. We call these extra costs inflation. For roads it does not go up exactly with cpi, but its a much better way than pretending that roads cost what they did in 1960.

Price per mile and price per gallon do not go up with inflation. Price of gasoline adjusted for inflation now is much lower than in 1980 even before taxes. Still in 1933 federal gas tax was 1.5/gallon. They dropped it when prohibition ended and used alcohol revenue, but raised it again in 1940. adjusted for inflation that 1940 tax would be 25.6 cents, 7.3 cents higher than it is now. Between 1940 and 1993 they would regularly raise the taxes to adjust for inflation, but then simply stopped and grabbed money from the general fund. Adjust for inflation the 1993 tax was 12 cents higher. If there was an inflator there would be a smaller problem with these highway bills. Since mpg has only changed slightly since 1993 for the fleet, a tax per mile would have needed to go up almost as much.

Inflation adjusted taxes on things like roads are better than a straight percentage tax that would amplify the spikes like 2008, when higher taxes would have been bad for the economy, then lower troughs like this year. No reason to pay twice as much for roads in 2008 as 2015 simply because people think percentage of price is "fair".

 

I already said they settle up debits and credits and the end of the month. At the moment I have more credits than debits. As I mentioned above I signed up to see how the system works not to save pennies a month of gas taxes.

Is it? I don't know how much a device costs or how much it would cost the DMV to set up the staff required to accept quarterly payments and the required enforcement system. We are both just guessing.

Taxes based on a rate may or may not need to be adjusted based on inflation. That all depends on the price of the item being taxed. Some things go up in price some go down over time. Of course you know I was talking about the fixed gasoline tax, which is not adjusted for inflation.

No the workload isn't close to zero. You are just about guaranteeing that each person contacts the DMV twice, one to estimate fees, and once to settle up the difference.

Any private party that certifies an odometer reading is going to require payment. Your theory of a free service to get you into their shop falls flat in reality. Do private shops that do emission checks do it for free to try to get you into their shop? No, they collect a fee. IF your car fails inspection AND you use them to do the repairs, SOME shops will waive the inspection fee.

You pay for every mile. That is the price you pay for privacy. I travel quite a bet out of state with my van so I chose an option with GPS tracking. I'm already carrying a GPS tracker in my pocket in the form of a cell phone. Why should I care if Azuga knows my travel schedule too?[/QUOTE]

 

The miles of highway to be maintained goes up as the number of people and cars go up. We build about 32,000 more miles of road each year.

The age of the highways to be maintained always goes up.

Why wouldn't the total tax needed to maintain the road system need to go up?

 

I want to make sure I understand your statement in view of your decisions. You claim this system is needed to collect more revenue but said your reason for volunteering was to pay less in taxes? (This is not a snide comment in any way. It really is to find out why you support the program.)

 

Excellent question if the tax rate were proportional to gas cost. When the rate is based off of gallons, unless physics is changing, then the fixed rate per gallon would need to go up.

 

I signed up for the latest OReGO trial to see how it works. There is no better way to find out how something works, the good, the bad, than to actually participate. I do save a little bit in taxes, so far less than $0.50 in two months. If things continue on the same track for the rest of the year I will save $3.00 by participating. Hardly much incentive to participate.

I suspect this will be the last trial Oregon does before it decides whether to implement this system across the whole state. (It is the 3rd one) So far everything has worked well for me. Every day my total mileage shows up on the website and once a month the account is settled. Technically everything works, no hassles so far.

Personally, I think billing per mile is a good system. I collects taxes based on a person's usage and collects the same amount regardless of the type of fuel. The challenge will be the issue of privacy. That will be the issue that may keep states from switching to a mileage tax instead of a gas tax.

 

Some nice sweetheart contracts for the companies running the program:
An Inside Look at the OReGO Road Usage Charging Program - Toll Roads News

I've copied some extracts below. (Sanef is the program's "account manager" and is also one of three CAMs: "Commercial Account Managers".)

"For the full-scale program, Sanef received about $850,000 in state funds to set up its systems and conduct a pre-certification operational trial, Michelle Godfrey, ODOT’s public information officer for OReGO told TRN. Going forward, ODOT will pay Sanef based on a quarterly rate of $48.37 per participating vehicle, with the compensation pro-rated based on the number of vehicles enrolled and the duration of enrollment, Godfrey added. "

"The state paid each CAM around $400,000 to set up its system and conduct a pre-certification operational trial, Whitty said, and each will keep 40 percent of the gross road usage charges it collects. It will also retain the revenue from its sale of distinct secondary services to customers."

"Everyone involved in Oregon’s program sees it as an investment. With OReGO limited to just 5,000 initial participants, road user charging is a money loser for Oregon, said ODOT’s Jim Whitty. And it’s not until RUC programs reach a million customers that the costs of program operations drop to a desirable range of 5 to 10 percent of gross revenue collected, he said"

 

I don't know if I would call losing money on the trial a sweetheart contract. Some quotes you left out:

"Bryer looks to the future, when road user charging scales up and even becomes mandatory. “We aren’t doing this to lose money forever. We’ll do this to actually make a profit. I think it remains to be seen where the profit is going to come from, whether it’s the sharing of the RUC revenue, or from sales of services or something in between.”

Sanef’s Isbell agrees. “For us, we don’t expect to look at this today and say, wow, we’re going to make lots and lots of money out of this, because we’re not going to make any. It’s about looking long term,” he said. “If Oregon is a success, you’ve already got California, Florida, other states looking at this, so obviously this would be a stepping stone for us to go into other states,” he concluded.

Oregon has 4 million people, so getting into the millions of users wouldn't be a problem if the program became mandatory. If Oregon and their partners can get the cost down to 5% I think it would be pretty competitive with other potential methods.

 

I probably missed this, but how does that work; self reporting, assumed mileage, or odometer reading?

I'd be fine if the final system is GPS optional, but I doubt that will be the case. In addition to privacy issues(for disclosure, I have my phone GPS turned off), there is a measurable amount of people that use third party gauges in their cars that plug into the OBDII port. Then it seems nearly all the major insurance companies offer an OBDII monitor option. Liberty Mutual needed it plugged in for 3 months. These various devices may not work correctly when using an OBD splitter plug, which just adds more cables in the driver's foot well.

As pointed out, the stores already collect sales taxes. Even states without sales tax still have the gas stations collecting gas tax. Increasing the per gallon tax isn't going to require any changes to the system in place now. Since DMVs are already collecting fees, they already have a collection department. It might have to be expanded if odometer mileage fees are added, but it is in place.

A GPS system has the cost of the trackers, plus the costs collected by the private company, in addition to any costs the DMV or state revenue collections department may require. Government outsourcing never seems to save any tax payer money in the end.

 

The system works just like the OBDII devices used by insurance companies. Those devices used by insurance companies already collect the data needed to charge a mileage fee so no extra device would be needed.

How does it work without GPS? The OBDII device collects the odometer reading from the car ECU and reports it back daily. Once a month a statement is sent and payment collected. No GPS or other location information is needed. That is for vehicles without OnStar or similar systems. OnStar already has the capability to collect all the information needed to charge a mileage fee

No doubt raising gas taxes would be the easiest way to collect more money today. However, looking to the future that gets more and more difficult. As gasoline consumption declines while vehicle miles increase the gas tax will need to be raised on a pretty frequent basis just to maintain revenue. Then there is the issue of alternative fuel vehicles. They didn't really matter when only a handful of people used them, but as the percentage increases, there will be louder and louder call to tax them some equivalent of a fuel tax.

I agree outsourcing doesn't save money but that is the way of the future. The political reality is the trend today is to replace government workers with contractors or contract the entire service to private companies. I got a good chuckle when my brother started complaining that fees went up at the DMV after it was contracted out to a private company. The waits didn't get any shorter nor the employees any friendlier. My reply: "What did you expect, that profit has to come from somewhere".

 

I guess I don't get it. Could you explain a bit more what you mean by "Tire tax"?

 

I just looked up vmt in oregon. They have been falling faster than efficiency is rising..

Annual vehicular miles by state | CarInsurance.com
Oregon vmt/vehicle is 8619 down over 11% since 1999 to 2011, the fleet fuel inconomy has increased 9% from 1999 to today.. Multiplied the avarage car probably paid 21% less in gas taxes in 2013 than 1999 simply because of efficiency and fewer miles per year, without adjusting for inflation Oregon's ODAT 2011-2013 budget gets about 22% of its money from fuel taxes.

You need an inflator whether per mile or per gallon. If its per gallon it probably needs to be a bigger deflator. You could use cpi on either then adjust every 10 years. One is not much more of a problem than another. The shortfall happens faster with $/gallon than $/mile but inflation is the biggest thing on either tax over a 10 year time period.

If oregon's fleet is like the national fleet and the new system costs 7% more, then those getting more than 21 mpg will pay more under the new scheme and it will add jobs. I doubt that is a good trade off, since most people will pay more, and those getting between 18-21mpg won't pay much less for the same revenue. It does help those getting 17 mpg or less. Adding registration fees to cars getting over 40 mpg would be much easier to implement. This is about hiding the tax and getting some more people employed to track and collect.

Oregon is a low population state. They collected $1.1B in fuel taxes in the 2 year 2011-2013 period. I don't really konw if the new system would cost $30M/year or $120M/year but if the citizens of oregon want to expand that way it probable is a lot less than say high speed rail in california or the big dig in boston. Still I would not like it rolled out to a more populous state like mine, where I'm sure non payment and profits would eat a bigger portion of the extra taxes.

 

Why is that better than gasoline. If I'm driving off road I burn truck tires much faster, but the tire tax would do nothing. Similarly more comfortable performance tires wear faster than cheap tires, do we want to encourage people to move down in quality to pay less tax?