October 04, 2004
Per mile instead of per gallon

As a mass-transit-loving, short-commute-driving liberal, I can certainly get behind proposals like this. I just have a hard time believing they'll ever see the light of day around here.

Texas is among a group of states researching how to replace the fuel tax with a fee based on the number of miles traveled — making every road a virtual tollway. Transportation officials from across the world discussed the concept here at last month's annual meetings of the trade groups representing the highway and tollway industries.

Fees for miles traveled would be measured by Global Positioning System receivers embedded in vehicles. The system would track which roads a motorist uses so the virtual tolls could be distributed to the appropriate agency.

Each jurisdiction could set its own per-mile fee. Data would be downloaded from vehicles monthly for billing, or could be transmitted at service stations in lieu of the gas tax.

I don't know about you, but I can already hear the black-helicopter crowd polishing their tinfoil hats at the prospect of government-embedded GPSes in their cars. Hell, I'm a bit squeamish about it myself.

Researchers love the idea that driving taxes could be adjusted to promote or discourage certain actions. The system could charge more per mile during peak hours, for instance, or add a surcharge for heavy trucks and sport utility vehicles.

Those promoting a mileage-based approach to highway taxes contend driving should be metered and billed according to use.

"Why shouldn't transportation be seen as a utility like electricity, water, etc.?" Hal Worrall, a consultant for Transportation Innovations Inc., asked during a panel at the International Bridge, Tunnel and Toll Road Association conference. "It's perceived as free in America and thus produces a large demand."

David Forkenbrock, director of the University of Iowa Public Policy Center, has been working on a model for four years. His research is funded by 15 states, including Texas, and the Federal Highway Administration.

As more hybrid and alternative-power vehicles are built, Forkenbrock said, gas-tax collections will suffer.

"A tax at the point of purchase is inferior to user charges at the exact point of travel," he said, explaining the growth of toll roads in recent years.

Squeamishness aside, this all makes sense to me. Why not make road users pay on a per-mile rather than a per-gallon-of-gas basis? If we can see - as we surely must have with the sales tax - that future trends will cause the revenues derived from that tax to go down, why not take steps now to correct for that so that we don't face a crisis down the line? Again, I don't think the political will exists to act on any of this, and there may well be valid objections that I haven't thought of in my exhaustive thirty-second contemplation of the matter, but I don't see how it hurts to talk about it.

UPDATE: Lots of good comments here, and also by Atrios. The privacy concerns are certainly valid (and I figure they're a dealbreaker even before we get to questions of efficacy), as are concerns that any such technology could be defeated. I'm surprised that no one has brought up the example of London, where drivers are charged differing amounts depending on when and where they drive. They've managed to do that without forcing a new device into cars there as well.

It's not clear to me that this is a loser from a conservation perspective. It seems to me that one intended effect of a miles-driven tax would be to encourage people to live closer to where they work and play. I've got coworkers who have 100-mile round trip commutes. I don't care what car they drive, they're using a lot of gasoline. If a mileage tax could be graded in the way that (say) home electricity usage is, so that you pay a higher amount the more you travel per day, this would be an improvement from a revenue-collection and public-policy perspective over a gas tax.

The devil's in the details. That's why I think it's great to talk about stuff like this.

UPDATE: blogHouston notes that many of us already have GPS tracking devices in our cars - they're called EZPass tags.

UPDATE: Sorry, London's system does involve adding RFID tags to existing cars (thanks to Charles E in the comments). Still, it's a useful real-world example.

Posted by Charles Kuffner on October 04, 2004 to Planes, Trains, and Automobiles | TrackBack

Frankly I think it's a dumb idea and will never work on a mass scale. Normally I like this sort of thing but not in this instance.

Before moving to Texas last year with my wife I worked in Alaska for the National Marine Fisheries Service (NMFS) regulating commercial fishing in the vast waters off Alaska in the North Pacfic and Bering Sea. We actually used similar technologies to track the movement of fishing boats to see whether they are fishing in closed areas and that sort of thing. But we were only regulating a few hundred fishing boats rather than millions of cars.

Here are some of the problems with the scheme.

1. People can disable any kind of technology. Within days you'll have instructions on the internet on how to disable these GPS trackers. Heck, you probably wouldn't even need to disable the machine if you just kept a signal jammer in your car and turned it on when you went driving. So it would look like your car never left your garage.

2. The only way to FORCE people to use such a thing is to make it illegal to drive your car without a functioning transponder. But can you really enforce such a law on millions of vehicles? If people know they can disable the transponder without fear of penalty they will do so, either cleverly by snipping a power wire, or brutally by using a hammer. When you are talking about commercial fishing boats it is different. NMFS would order vessels back to port when we would detect a malfunctioning transponder or one that was not working. We would do that by contacting the vessel by radio, or the home company by phone. You can't order people out of their cars when a piece of equipment stops working. Once enforcement is exposed to be a fraud everyone with the inclination will disable these things.

3. Nothing is wrong with the gas tax. It actually serves a dual purpose: (1) to raise transportation funds, and (2) to encourage conservation by taxing gas guzzlers more than hybrids. It's far easier to tax fuel than miles driven. So people worry that gas tax revenues will go down when cars get more efficient? Just raise the tax when that happens. No problem. The same thing will happen under the proposed scheme if people drive less. Tax revenues will also go down.

4. What do you do about cars from out of the area? In a city like Houston, some cars are driven by locals, but a big percentage are people passing through or people from outside the metro area who are commuting in. The gas tax captures these but unless you have a national database of car GPS units, you won't collect on them.

5. What about the police using these things in criminal investigations and how does that comport with illegal search and seizure? Can the goverment get ahold of your vehicle tracking logs to prove you were in a specific location at a specific time? Seems that could infringe on privacy laws. Could the government get the IDs of all cars that were in a certain area at a certain time to question all the drivers in a fishing expedition? What are the limits? There are very real privacy concerns when the government forces you to use a tracking device against your will.

Anyway, I just don't like it. I think the traditional gas taxes combined with smart fares on toll roads are just fine. I was down visiting my wife's family in Chile last month. There are a lot of toll roads around Santiago and all of them have smart toll lanes where you can drive through the toll check at high speed and the toll booth reads a bar code on your windshield and you get a monthly toll bill just like your electric bill. I guess the same technology is used in the US too. I think that is much preferable to having the goverment track your every movement.

Posted by: Kent on October 4, 2004 10:20 AM

If they do charge all vehicles the same tax per mile, it will remove an incentive to drive more efficient vehicles. I could support this if (a) the government couldn't track your whereabouts with it, and (b) they had a "multiplier" by make and model which reflected fuel economy and how much that type pollutes on average.

If the base tax were, say, 1.5 cents per mile, perhaps a Toyota Prius might pay 0.5 times that amount and a huge, old smog-belching gas guzzler 2-3 times that amount.

If they can easily track your whereabouts, I'm against it, and if they don't have a way to reward cleaner, more efficient vehicles, I'm also against it.

Posted by: Tim on October 4, 2004 10:24 AM

Something else I forgot.

GPS tracks both SPEED and location. Are you comfortable with having a transponder in your car that the government can use to nab you for speeding EVERY SINGLE INSTANCE that you exceed the speed limit? You want to get dozens of speeding tickets in the mail every month. What about rolling through stop signs? They can probably catch you for that as well.

So you say that the system would ONLY be used to levy taxes and the information would not be available to law inforcement? Are you sure? Once a technology is out there the police agencies always want to get it for their own use as well. And the laws that you might think protect you today can always be changed tomorrow. Think about the Patriot Act.

Posted by: Kent on October 4, 2004 10:25 AM

Researchers love the idea that driving taxes could be adjusted to promote or discourage certain actions. The system could charge more per mile during peak hours, for instance, or add a surcharge for heavy trucks and sport utility vehicles.

So why should peak hour users pay more? Do cars driving at peak hours cause more wear and tear on the highways? It's not like peak hour travel is discretionary for most drivers. They are forced to drive to and from work on the hours that their employer mandates. Sure peak hour drivers end up causing traffic jams and congestion. But who suffers from this? Other peak hour drivers.

As for increasing taxes on trucks and SUVs. The current gas tax already does this much more elegantly. And trucks already pay a host of additional taxes.

Posted by: Kent on October 4, 2004 10:31 AM

As for increasing taxes on trucks and SUVs. The current gas tax already does this much more elegantly. And trucks already pay a host of additional taxes.

True enough. I see no reason to change the gas tax model, personally. But if they change it, they very much need to factor in fuel efficiency when computing the tax, or else it will be a tax increase on Prius owners and a tax cut for Hummer owners. Bad public policy.

In reality, I suspect they are doing this because no one has the political will to raise taxes, particularly at the pump with $50 a barrel oil. By changing the model completely, it's easier for them to create a system that gives more overall revenue and people won't notice the "stealth tax hike."

Another thing to consider: Will law enforcement be able to use your GPS device against you to "testify against you" if you're speeding? If they can tell that you took an hour to get from Checkpoint Bravo to Checkpoint Charlie, and they are 80 miles apart, will they be able to mail you a ticket for doing 80 MPH even though no police ever stopped you?

Posted by: Tim on October 4, 2004 11:04 AM

Gallons of fuel used is likely a better correlate with road wear than miles driven, so the gas tax is fairer and promotes efficiency better than your per-mile fee. So the gas tax is better than per-mile even before you get to its environmental and civil liberties advantages. How about we just call the gas tax a "road use tax" and declare victory?

Posted by: bittern on October 4, 2004 12:53 PM

Don't you hate it when you come into comments with something insightful, only to find that other insightful people have beat you to it?

Posted by: Buhallin on October 4, 2004 1:21 PM

What is the possible justification for effectively increasing the tax burden of anyone who chooses to purchase a fuel efficient vehicle in order to lower the tax burden on people who choose to purchase vehicles that get five miles to the gallon? And please spare us the freeper logic about how the wealthy, as wealth-producing engines of society, deserve more benefits and lower taxes than everyone else.

Posted by: Shelley on October 4, 2004 2:49 PM

Charles, it's just frustrating that a reasonable guy like you can't see what seems obvious to us. Okay, work with me.

"It seems to me that one intended effect of a miles-driven tax would be to encourage people to live closer to where they work and play."

The gas tax should encourage people to live closer, just as much, because the amount of gas you buy is fairly proportional to the miles you drive. It's even better, though, because it's exactly proportional to the amount of energy you use up.

In order to also promote use of better-mileage vehicles, how about we take your idea of a per mile tax and adjust it for fuel efficiency of vehicles, say, charge twice the per mile rate for heavy, inefficient vehicles that use more gas and presumably wear out roads faster? Won't you follow along with me to make this one improvement to your scheme? (trick question!)

Posted by: bittern on October 4, 2004 4:27 PM

Your update is incorrect. The London system does require new equipment. RFID tags were added to license plates, sensors in the road detect the tag when you enter and exit the surcharge zone.

Posted by: Charles E on October 5, 2004 1:42 AM

I wrote a lot about the privacy concerns upstream but it occurs to me that this proposal simply doesn't pass muster from a cost-benefit perspective either.

The primary objective of all of these revenue schemes is to raise money for transportation projects or other government uses. Secondary objectives are to provide incentives to change driving behaviors. However as we have already discussed, a fuel tax provides similar incentives that a miles driven tax would provide, and has the added advantage of encouraging conservation.

When evaluating any revenue collection proposal we need to look at both the projected revenue stream and the COSTS of collection. This is important because the public pays the GROSS revenues and the government receives the NET revenues. If a certain net revenue level is needed to support a new program then it becomes clear that it is the public that ultimately bears the burden of the costs of administering a program.

A new GPS tracking/fee system would likely have the following costs:

1. GPS equipment in vehicles. It doesn't matter whether this cost is paid directly by consumers or the government, consumers will ultimately pay for it in the end.

2. GPS tracking equipment and computer databases needed to track hundreds of thousands of vehicles. We're talking MASSIVE software development and systems maintenance costs. I smell HUGE government contracts here, funded by the public of course.

3. Repair facilities to repair the thousands of GPS units that will fail through wear and tear or deliberate acts by the consumer.

4. Printing and mailing costs to mail millions of monthly toll bills to consumers (this is potentially huge).

5. Check writing and mailing costs for consumers to mail millions of monthly bills back to the government.

6. Enforcement costs to staff a police division to check and inspect cars for compliance with the system.

Compare that to the costs of adminstering a gas tax:

1. Costs imposed on the several hundred gas stations to submit sales tax revenues to the taxing authorities.

2. Costs of auditing the tax receipts submitted by several hundred gas stations in the region.

That's it. Because consumers pay at the pump they aren't paying any additional transaction costs that they wouldn't already be paying by purchasing the gas tax free. The monitoring technology is the gas pump which is already regulated for accuracy by the state dept of weights and measures and would continue to be regulated whether or not a gas tax is imposed because consumers always have an interest in knowing that when they pump a gallon of gas they are actually getting a gallon of gas.

In comparing the the gas tax to the GPS tracking proposal, it seems clear that the GPS system has huge potential costs that would be born entirely by the consumer if we assume that the NET revenues to the government would be equal under the two systems. In my mind, it's simply poor government policy to impose unnecessary costs and burdens on the public when simpler more elegant solutions are available.

Posted by: Kent on October 5, 2004 9:41 AM

What Kent said. I can't think of one instance where this tax would be fairer than a gas tax. Let's hope this idea dies a quick and painless death.

But if the SUV lobby is going to ram this through, we should at least implement it without requiring invasive tracking equipment to be installed in all cars.

The idea is, require auto insurers to sell liability insurance on a per-mile, rather than a per-month basis. (This could be enforced by a simple odometer check when filing an accident report, or when getting your annual inspection.) Then, simply tax the insurance premiums. (This has the side benefit of making insurance premiums more accurately reflect accident risk as well.)

On a side note, EZPass and other RFID tags are not GPS receivers. They only know where you are when you drive by an RFID transponder site. The site has a known location; GPS doesn't enter into it.

Posted by: Mathwiz on October 5, 2004 10:35 AM

I don't think there's any reason to fear something like this getting rammed through. Look at the opposition - environmentalists, privacy advocates, and (I'd bet) suburbanites with long commutes. The only reason to try something like this is to increase revenues, and if there isn't the will to hike the gas tax, where would the will to overhaul the system come from? Besides, the surreptitious-yet-strong movement towards toll roads would seem to sap momentum for this more complicated scheme.

This has been a very good discussion, which is what I was hoping for. Thanks for all the insightful comments!

Posted by: Charles Kuffner on October 5, 2004 10:42 AM

I've always been appalled that the gas tax is as low as it is - and I'm one of those "part of the problem" guys that buys 100 gallons of gas a month just to support my commute. I think the gas tax taxes exactly the right thing, at least as long as the overwhelming majority of vehicles on the road are using gas.

Is it even possible to use up all the earth's concrete?

Posted by: kodi on October 7, 2004 8:32 AM

The plans by the government to replace the present fuel taxation with the road charge, based on the time of day and distanced travelled by the driver, would be a waste of time and tax payer’s money, as the equipment needed to allow the system to work, would cost millions of British pounds. Even when fitted, the road charge would in the long term cost more than the present fuel taxation. The only profiteers would be the creator and government, as the taxpayer’s would be losing out greatly.

Posted by: kurt on November 11, 2005 2:24 PM