Hooniverse Asks: Gas Tax or Road Tax, What's Your Poison?

Gas Tax
California has the highest number of high-mpg hybrid and electric cars in the nation. And, according to Polk Research, Los Angeles and San Francisco together account for almost one-quarter of all the nation’s EV registrations. That means that we have a lot of cars on the road that aren’t paying into the infrastructure-supporting gas tax like traditional internal combustion-powered cars and trucks do.
This inequity has led the state to propose a switch from a gas tax to a road usage tax, where all users would presumably pay by mile instead of by gallon purchased. The logistics of how this would be accomplished aside, there’s a lot to consider with such a switch. First off, it would allow EV and Hybrid car drivers to pay their fair share in support of the roads they are using. As a direct usage tax, it potentially would also allow for more flexibility in practice with not every mile counting the same—congested areas could charge more than less congested roads affecting traffic patterns, pollution, and congestion, much like is done in places like London.
The down side to a switch to a road tax is of course that it requires some sort of digital tattler on board, like a FastPass, to actually accrue the miles and set the tax owed. Some people will not like that seeing it as an affront to their freedoms. The other major issue is the chance that the road tax wouldn’t replace the gas tax but would be dumped on top of it as yet another burden on the consumer to pay for government-mandated malarkey. That’s pretty much what happened in London, but at least the commuters there have viable alternatives to driving while in the city.
What is the state of affairs where you live, are there rumblings like in California to impose a direct-use tax? Do you already face such a road tax? Death and taxes are supposedly twin ultimatums, when it comes to the latter, where would you rather pay: at the pump or on the road?
Image: PennLive

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  1. Tiberiuswise Avatar

    Neither. Although it may seem intuitive to tie road costs to use, I would consult Admiral Akbar.
    Most states would be well advised to, and do, come up with a balance of income and sales tax depending and their specific situation with regard to job concentration and commuting habits. The bottom line is to collect enough revenue to cover expenditures right? So keep it simple smarty. With these two taxes you get them coming and going, where they work and where they live. Why isn’t that enough?
    I’m torn on property taxes. “But they pay for the schools. Do you hate children?” They also help perpetuate vast inequalities in the quality of education. I think I ultimately fall back on my previous concept. Also, I personally don’t want to more to Florida when I retire.
    Adding on more taxes to cover other expenditures is just like giving your teenager an extra $30 to take his girlfriend to the movies after he spent his regular allowance.*
    And by the way, knock off that extra 9/10 of a cent. It’s obnoxious.
    *apologies to teenagers for comparing them to the government.

  2. Sjalabais Avatar
    Sjalabais

    My city, Bergen, has 400 years of history when it comes to road and harbour tolls*. A toll ring to the city was established in the early 80s, and I can’t go anywhere far without hitting toll roads. The city’s toll ring used to cost me about 3$ to enter, which is now .50$ cheaper. The caveat is a higher toll of 7.50$ during rush hour. If I go to the mountains, I quickly run into a 10$ toll. All of this is automated, and if you opt for the privacy solution where your passes are being deleted, you are going to pay every time you pass an identifier – as opposed to a 1 hour quarantine otherwise.
    The EV policy of Norway is quite well-known I guess: EV’s do not pay elaborate purchase taxes, no road tax, no tolls or ferries and they even get free parking several places. Considering the various purchase taxes doubling to tripling new car prices in Norway as compared to, say, Germany, EV’s are super popular; about one third of new car registrations locally. A Tesla S is priced like a Volvo XC70.
    As a result, the general motorist is a bit annoyed. People on islands buy EVs, so ferry companies ask for renogiations of contracts or handouts (in quasi socialist Norway a straight price increase is not that easy). The massive financial burden that new car taxes are need to be seen as opportunity costs to the tax purse when left out on EVs. So the tax credit is a subsidy to private consumption that inflicts harm on general welfare.
    So I guess a road tax is a fine, and just, solution. But why should it be so technically advanced and big brotherish? Why not just read distance driven off the odometer every year, report it to the taxman as you report it to insurance. Separate road tolls on private roads etc can still be paid by FastPass, AutoPass and the like.
    *http://www.nrk.no/hordaland/xl/bompengebyen-bergen-1.12733618
    (Should work well with Google Translate)

    1. Dean Bigglesworth Avatar
      Dean Bigglesworth

      Toll Roads in Norway vs the US..
      I liked how I could register my licence plate and credit card in advance online before coming to Norway, and then any tolls would just be debited from my card. And IIRC you could pay by card at the booth if you wanted. Much simpler than the US version, at least for a tourist.
      In the US i had absolutely no idea what my tolls would be and and my options were either cash or a rented bloody expensive PlatePass transponder.. I opted for cash and still i almost screwed up once, i was nearing my exit and looked at the ticket with prices specific to the exits and didn’t have enough cash to pay for it. Luckily there was an ATM at the last rest stop before my exit, and it was one which actually worked with one of my cards.. Heading back east to NY i think i racked up over 50$ in tolls on one day. The most expensive was 35$ and the cheapest was maybe 2$. But fuel was cheap, which was nice.
      As a sort of related traveling tip for anyone traveling into the US.. Do not have a credit/debit combination card as your only card, they are nearly unheard of over there and rarely work without a chip reader, and those are few and far between. Nearly didn’t get my pre-paid rental from Hertz because of that, and it didn’t work in most shops or gas stations. Plenty of cash and a Visa or MasterCard without a connected debit card seemed to be your best bet.

      1. Sjalabais Avatar
        Sjalabais

        Good insight! True about plastic money: In Norway you can buy a bus ticket with a VISA card. It’s a little shock just to get to Central Europe.

        1. Dean Bigglesworth Avatar
          Dean Bigglesworth

          Always carry a towel and plenty of cash.

          1. dead_elvis Avatar
            dead_elvis

            A towel is massively useful. Also, don’t panic.

      2. NapoleonSolo Avatar
        NapoleonSolo

        As an American living in the USA, I have several credit/debit combo cards that always work flawlessly as either credit or debit. Once, some years ago, I tried to rent a car and it turned out I could not use a debit-only card because bank balances and credit lines are not the same when you are effectively placing a deposit on something like a rental car.
        Still, your advice is sound. However, I wouldn’t recommend traveling thousands of miles away in a foreign country with a single plastic card as your only source of funds, anyway. I seldom carry cash anymore, but I always have more than one source of funds available even in my home town.

        1. Dean Bigglesworth Avatar
          Dean Bigglesworth

          At least two cards from different banks + cash is what i do when traveling.
          I read the terms so I knew going in that Hertz doesn’t accept debit cards which is why i pre-paid it with a credit card, but i was still surprised when they refused said credit card because it’s also a debit card. The clerk had never in her life heard of such a thing.
          my google-fu might be failing but I can’t find any US banks offering a similar combo card to ours, i.e. two separate cards with their own numbers combined into one card with a shared PIN. The only reference i find is of Fifth Third Banks Duo card from 2011 being “the first true combo card” in the US, but I can’t find it on their website.

      3. alboalt Avatar
        alboalt

        Anyone visiting and planning to drive a lot in the Northeast of the US (mid atlantic and new england) needs an EZ pass. PA has a Go-Pak you can buy at any AAA and use right away, with just a $3 fee.

  3. smalleyxb122 Avatar
    smalleyxb122

    Historically, a gas tax was reasonably fair. Heavier vehicles cause more wear to the infrastructure, and owners of heavier cars pay more tax, simply because their vehicles use more fuel.
    With hybrid vehicles becoming more mainstream, there are 3 potential ways to address this new inequity.
    1. GPS tracking. This option would encounter the greatest resistance to implementation.
    2. As part of your annual inspection, taxes are levied base on GVW and change in odometer reading. This would be easy to implement in places where annual inspections are already in place.
    3. Tax road electricity. Every plug-in hybrid or electric car uses a charger which would be easy to meter separately, or in addition to the main service. Just as road diesel is more expensive than agricultural diesel, road electricity would be more expensive than home electricity.

    1. Tanshanomi Avatar

      I was thinking about #2. They already make odometers pretty tamper resistant. As long as they don’t track me with electronic spies or nannies, I’m good.

      1. karonetwentyc Avatar
        karonetwentyc

        The only downside (in California, at least) to tying it to an annual inspection is that we don’t have those – at least, not mechanical inspections.
        Emissions are checked every two years and are required at renewal of registration or time of sale, though I have had the utterly unpleasant experience of randomly being hit with an annual test because a bureaucrat I’ve never met has decided that whatever it is I’m driving that year with the name that they can’t pronounce is obviously a problem that someone needs to do something about… So I jump through the hoops, get it tested, and end up doubling the cost of registration by the time the car passes the test.
        The real issue is that the percentage of existing fees and taxes in California that goes to road building and maintenance is only somewhere around 40% of what’s actually taken in – and even that can, under the right circumstances, be reallocated to other things; see this incredibly dry summary from the CA DOT for an example.
        My suggestion would be that rather than trying to implement something new, costly, and unworkable, move a greater percentage of the existing fees and taxes into road building and maintenance… But that would be too obvious.

        1. Tiller188 Avatar
          Tiller188

          Agreed about the issue of getting the tax money to actually go towards the intended use (in this case, road building and maintenance). I’m all for a “payment for goods/services rendered” approach, which is why I kinda like the idea of a road use tax to cover infrastructure costs over the admittedly simpler approach advocated by Tiberiuswise right up at the top of this comment page. I only like it if it actually works as intended, though, so if the collected funds start getting shuffled around/mixed in with other revenue sources, well, what was the point in collecting specifically based on mileage/road usage?
          There’s also the issue of basing the tax on pure mileage (on the chance that someone accrues a significant amount of mileage on non-public roadways), but as Tanshanomi notes, I’d rather do that and therefore vastly simplify the calculation of the amount owed, basing it simply on odometer reading, than submit to GPS tracking to validate exactly how much of my driving was done on “tax-eligible” public roadways.

  4. nanoop Avatar
    nanoop

    The nation I’m living in makes more money from the first-time registration royalty than from gas and diesel* taxes, or from toll roads. It makes more money from used-car re-registrations than from gas taxes (annual net intake of gasoline tax is 60% of the net diesel tax).
    That’s ok for me: if you need a new car, you’ll pay – a LOT. If you buy a used car, things are better (although used car prices are spoiled by that LOT). When you’re using a car, you’ll pay more (road and fuel) than when it’s parked.
    The actual mix doesn’t matter to me, but since the state is moving towards electrical cars, the road tolls will increase in the future. What annoys me: instead of shifting from fuel tax to road tax (even by just freezing fuel tax), they’ll raise both.
    *This contains most commercial diesel.

  5. Alff Avatar
    Alff

    C. None of the above

  6. P161911 Avatar
    P161911

    As an EV driver in Georgia, my state went from being the best state for an EV ($5000 state income tax credit that can be taken over 5 years), to the worst (no tax credit and $200/year EV tax). I knew this going in on the Leaf and factored it into the equation. The $200/year figure was derived by some genius in our state legislature that figured that most SUVS pay about $125/year in gas taxes. They just rounded up. They realized that the $5000 tax credit created in the days of the EV-1 was too successful when Georgia became the number one market for Nissan Leafs. Not surprising considering that the tax credit worked out to $208/month and Nissan was leasing a Leaf for between $245-$$285/month.

  7. engineerd Avatar
    engineerd

    There have been rumblings in Michigan about a road tax. It’s going nowhere quick because the mechanism for collection is to ambiguous at this time for anyone to give it any serious thought. Michigan’s problem is somewhere along the line our 5th highest gas tax in the nation was partially diverted to school funding. So now anyone talks about anything to do with the gas tax you get the “Do you hate children!” crowd screeching at the top of their lungs.
    This entire conversation is kind of ridiculous. The government (state and federal) wanted us to be more fuel efficient and pushed for hybrids and more fuel efficient gas and diesel vehicles. Then, when the population did what the government wanted the government was like, “Crap. Now we don’t have enough revenue.” So now they have to figure out a way to replace the revenue they aren’t getting because we did exactly what they wanted us to do.

    1. Tiberiuswise Avatar

      I think the conversation is brilliant. Instead of talking about what they’ve done with the money we gave them, they get us talking about which new tax we would prefer.

      1. karonetwentyc Avatar
        karonetwentyc

        See comments above re: California. The situation is exactly the same here.

      2. engineerd Avatar
        engineerd

        Sometimes I wonder if our country is really run by the Wizard of Oz. “Pay no attention to the man behind the curtain!”

    2. Sjalabais Avatar
      Sjalabais

      Same here in all sorts of flavours. For decades, diesel engines were taxed lower than gas engines. Now, particle pollution and inversion over cities have put diesels out of favour – a concept that made up half of all new car sales. Several cities talk about forbidding diesel cars to enter their centres. That also affects the used car market, of course.

  8. CraigSu Avatar
    CraigSu

    I would offer a hybrid solution (pun intended):
    1. Keep the gas tax in place as long as it’s used only for road and infrastructure maintenance and repair. Here in NC we have one of the highest gas taxes in the US. It was only a few years ago when the state legislature agreed to quit raiding the gas tax for “shortfalls” in the general fund (oddly enough when the Democrats no longer held sway after 100 years of being the dominant party) and only use it for its intended purpose.
    2. Implement the road tax for hybrids and EVs using a sliding scale for the hybrids based on the EPA’s numbers for the same car in its non-hybrid form.
    That way everyone who drives pays something in the way of tax.

    1. dead_elvis Avatar
      dead_elvis

      I can imagine the reaction among a certain crowd: “But what about those tax-evading bicyclists?!” (followed by rage-induced stroke).

      1. karonetwentyc Avatar
        karonetwentyc

        To my mind that’s a valid question to raise given that bicycles are also using the roads, having specific lanes dedicated to them (often at the cost of encroachment into available lanes for motor vehicles), and other amenities (lockboxes at train stations, etc.) provided at public expense.
        Before this taken to mean that I’ve flown into the aforementioned paroxysm of rage over bicycles and / or cyclists in general, I haven’t. However, a flat-rate annual fee akin to vehicle registration (except at a much lower rate) would at least go some way towards reclaiming the costs of providing these things without having to apportion money from other projects.

        1. dead_elvis Avatar
          dead_elvis

          Nah, you’re way too reasoned to be mistaken for part of that crowd.
          I’m not a big fan of Seattle’s “road diet” program which involves intentionally reducing the carrying capacity of certain streets by installing dedicated bike lanes & barriers. While a few folks may take up biking or use the bus because of these measures, it sure doesn’t seem to have done anything but make driving more annoying. (Which would be a suitable, passive-aggressive, utterly Seattle way of doing things….)
          Many of the loudest pro-bike lane voices here shout about how 99% of cyclists also own cars, and thus are getting hit unfairly with a bike-specific tax or registration since they’re already paying gas taxes, etc. Well, tough shit. I own more vehicles than I can operate at once – should I get to skip out on registering my motorcycle because I’ve already done so with my car? Of course not, but that’s analogous to their beef.

  9. hwyengr Avatar
    hwyengr

    The problem is a double whammy, but the far heavier portion is that the federal gas tax hasn’t been increased since the early 90s. I promise you that materials costs to build and maintain roads has increased dramatically since the early 90s. And since the Feds pick up anywhere from 50% to 95% of the cost (depending on the type of project), this is why we can’t have nice things.
    And here is where I lose (american) friends on automotive forums. The top federal tax rate when the interstates were built in the ’50s was 91%. Ninety-one percent. Taxes have not been so low, literally, since 1931 when we didn’t have a system of publicly maintained infrastructure. Railroads were profitable enough to pay for themselves, flying was basically a hobby done from grass fields, and city streets were paid for by a then-ever expanding urban base. Well, the cities are drying up, the railroads haul cargo only and we throw scraps to Amtrak, the airport use and landing fees don’t cover the FAA’s expenditures, and people are trying to claw back every penny. I hope everyone likes the ultimate road fee, toll booths, because that’s where the industry is going. Public-Private Partnerships are the wave of the engineering future, and the only way to get the “private” bankers interested is by promising a healthy revenue stream.

    1. Vairship Avatar
      Vairship

      Yup, you get what you pay for, but nobody wants to hear that. Love the 1950s because we could build highways, start space programs etc? Better look at the tax rates from back then.

  10. Van_Sarockin Avatar
    Van_Sarockin

    Gas tax is the way to go right now. It’s simple cheap and effective. VMT requires a whole new level of technology, cost and privacy intrusion. The dream is to tax you by mile for every different type of road you drive on, by time of day. Double the gas tax. No one will notice. The price of a gallon is fluctuating by about that every week, and is likely close to an all-time low. It this pushes people into hubrids, EVs and carpooling, so much the better. Another thing that should be done, is to eliminate the diesel subsidy, and to price the road impact of heavy trucks appropriately.

  11. Scoff Law Avatar
    Scoff Law

    There is no real winning scenario here, if you raise the gas tax you penalize based on fuel consumption and not everyone can make due with a Prius, when was the last time you saw a painter or roofer show up in a Prius full of paint and shingles; then there is the road (use) tax which penalizes those who have to commute moderate to significant distances, I don’t want to pay more because my employer decides to move to new facility 20 miles further away from where I live…
    Maybe if we quit building/widening new roads every time some moron throws up a new subdivision or stip mall, we might have enough money to fix what we have; don’t like the way the neighborhood is going then stay and do something about instead of heading for the ‘burbs at the first sign of trouble, nobody forced you and 10,00 other people to buy a 300k house in the boondocks surrounded by 2 lane blacktop.