Tuesday, January 06, 2009

Oregon's mileage tax proposal

A few days ago I was intrigued by a couple news stories about Oregon's proposal to tax mileage instead of gas. The basic premise is, instead of paying a flat per gallon tax, drivers would pay a per mile tax every time they fill up at the pump. I personally think the idea is brilliant. Both the AP and the LA Times wrote articles, although I really can't figure out why the story popped up now, maybe it was a slow news day, or its possible Oregon may be discussing it this year in their state legislature. 

Anyway, I found the stories light on concrete information (what a surprise) so I tracked down the lengthy report from the Oregon Department of Transportation that came out in 2007. In it, they discuss the results of a year long pilot study they conducted with 285 drivers in the Portland area. Monitoring boxes were installed in the cars to keep track of the mileage, and a couple participating gas stations had special equipment installed to calculate the tax. You can read all about the mechanics of the study in the report or in the above cited articles.

I want to point out a couple issues raised in the stories on why a mileage tax might be a bad idea. First, there are supposedly complaints about privacy. Can't the state then track all of our movements? I really think this is a non-issue raised by the usual suspects you would expect to be scared of the mythical big brother. Why? The way the program is designed in Oregon's pilot study, and what they propose to policymakers, is that the device keeps track of mileage within a designated zone (i.e. a large geographic area). The specific movements within that zone are never recorded in the car, or in a centralized database. Sure, you could figure out some general area a person might be in, but that isn't all that different than using a cell phone or a credit card, which can be traced. Furthermore, in the study of the people who participated in the program, the overwhelming majority were satisfied with the level of privacy associated with the mileage tax. In a survey of participants before the study (but after they had explained to them how the program worked), 82% had no concern with privacy issues associated with the equipment. Only 3% had great concern. In a survey of participants after the study was over, 69% were satisfied with the level of privacy, 13% were neutral, and 2% were dissatisfied. 

Second, supposedly instituting a mileage tax will reduce the incentive to buy fuel efficient vehicles. What? This makes absolutely no sense. The incentive to buy fuel efficient vehicles is to buy less GAS, not pay a few pennies less in gas taxes. 

I really like this proposal, and while I'm not that optimistic it will get off the ground across the country, I like it because it encourages people to actually drive less. My own personal opinion in the whole debate about alternative energy and fuel efficient cars, is the best answer is to use LESS, not use the same amount but make it more environmentally friendly. In the Oregon study, they conducted an experiment, monitoring the driving patterns of people before and during the study, and found that all participants who were being charged the gas tax were driving less. The differences were somewhat small, but I think the potential is there to make a significant environmental impact if a policy like this is adopted. And, the incentive is small. People that need to drive a lot are not going to have some new heavy financial burden placed upon them. It seems that just knowing that if we drive less, we can save a buck here or there, makes people think a little more about their transportation habits.