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A new mileage tax may replace the gas tax in Oregon. Oregon residents will be taxed by the number of miles travelled, as they travel along the state's highways like Highway 30 pictured here. Those not participating will face higher taxes at the pump.  (Source: Lyn Topinka)
A new ambitious high-tech effort to fairly distribute roadwork taxes proposed in Oregon, but can it overcome fears of government tracking?

Nobody likes to pay taxes, but they are reality of modern U.S. government as we know it.  However, if you have to pay taxes, you at least want them to be fair.  That's the mentality driving a rather revolutionary, albeit controversial, new plan in the state of Oregon.

In Oregon, as in other states, people have long complained about using fuel taxes to finance road work.  Such measures place a larger tax burden on those in professions requiring heavier vehicles.  So Oregon's Gov. Ted Kulongoski (D) has developed a new plan -- pay by mileage.

Oregon, whose highways recently gained attention via a new solar project, is now looking to legislate the governor's plan.  The new legislation will provide Oregon with "a path to transition away from the gas tax as the central funding source for transportation" via a mileage tax implemented with the help of GPS satellites.

While the exact details are still being ironed out, Gov. Kulongoski's web page gives the basics of the plan.  In it he states, "As Oregonians drive less and demand more fuel-efficient vehicles, it is increasingly important that the state find a new way, other than the gas tax, to finance our transportation system."

He is creating a task force "to partner with auto manufacturers to refine technology that would enable Oregonians to pay for the transportation system based on how many miles they drive."  Key studies were performed in 2006 and 2007 that indicate that such a program would indeed be possible. 

In the 2007 test which lasted 10 months with 300 motorists at two service stations, drivers were taxed 1.2 cents per mile and were refunded the 24 cents a gallon state gas tax.  When the motorists got to the pump, their vehicles connected to government computers informing them of the mileage (calculated via GPS tracking) and issuing tax.  Equipment for the test came from Oregon State University.

While clever, the program faces one enormous thorny obstacle -- concerns over the loss of privacy. 

The governor's online outline states, "The governor is committed to ensuring that rural Oregon is not adversely affected and that privacy concerns are addressed."

Despite assurances from James Whitty, the ODOT official in charge of the project, that the new GPS system would not be used for continuous tracking of citizens' cars, many advocacy groups are outraged and many remain fearful.  The final report on the 2007 test deployment was conscious of this fear, stating, "The concept requires no transmission of vehicle travel locations, either in real time or of travel history.  Accordingly, no travel location points are stored within the vehicle or transmitted elsewhere. Thus there can be no ‘tracking’ of vehicle movements."

Advocates point out that the devices are not developed by Oregon, but rather by industry partners.  The program's policy page states, "ODOT would have no involvement in developing the on-vehicle devices, installing them in vehicles, maintaining them or having any other access to them except, perhaps, in situations involving tampering or similar fee evasion activities."

However, even if privacy concerns can be laid to rest, there will also be a large price tag associated with initially implementing the program, one which may give residents sticker shock.  An initial investment of $20M USD would be needed, according to the governor, just to see if the program was viable.  A full deployment would require GPS be gradually added to gas stations and to all vehicles in the state.

The proposal also calls for a punitive tax against those not adopting the new device -- the gas tax will continue for vehicles not equipped to pay the mileage tax, but it will be increased 2 cents.

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Simpler solution
By nafhan on 12/31/2008 11:29:50 AM , Rating: 2
Wouldn't raising taxes on gas be a simpler and more effective solution?
As others have already mentioned, fuel usage is directly tied to the amount of driving done (duh), and raising taxes would take into account heavier vehicles with poor fuel mileage putting more of an impact on the road. Also, it would reduce environmental impact as more expensive fuel leads to less fuel usage (more efficient vehicles and/or less driving).

RE: Simpler solution
By Bateluer on 12/31/2008 12:54:18 PM , Rating: 1
Because that would drive more people to using increasingly fuel efficient vehicles, or alternative transportation, further increasing their tax revenue.

RE: Simpler solution
By FITCamaro on 12/31/2008 1:37:29 PM , Rating: 2
You mean decreasing their tax revenue.

RE: Simpler solution
By ZmaxDP on 12/31/2008 1:37:21 PM , Rating: 2
Not necessarily, gas taxes have their own problems.

First, do Suburbans at 5000lb ans 12 MPG have an equally proportionate increased impact on infrastructure over a 3500lb 45 MPG Prius? No.

As vehicles switch from fossil fuels to electric propulsion, how do we pay for roads then? The gas tax won't get us squat in that scenario.

Increasing the gas tax will increase prices in consumer products that need transportation in their manufacture or distribution chain - read ALL products. The real reason the state is doing this is to try and reduce the tax burden on transportation dependent businesses (most) and shift it elsewhere. Oregon is a very rural state, and in such states transportation can be a major cost for businesses. This is basically a business tax cut in Oregon. About the only business sector this wouldn't significantly impact is the Tech/Software sector.

Increasing the tax would also eventually reduce the number of miles driven in your scenario (I'm assuming it is raised enough to actually inhibit driving) so it would actually tend to reduce revenue for infrastructure over time, not increase it.

Gas taxes also unfairly tax less fortunate people more in two ways. First, older cars are usually less efficient. Poorer people typicall drive older, less efficient cars. Therefore, they use more gas per mile than someone who can go out and buy a newer more efficient car. So, they pay more taxes per mile driven.

Second, at least in most southern and western stated including Oregon, housing prices near job centers (downtown, commercial districts) are much higher. So, the people who tend to live closest to work are the more affluent. In Dallas for instance, a family making 60K/year with no children is best case going to find an affordable house to live in 30 to 50 miles from down town. Apartments aren't much better at about 20 miles out. If you make 160K/year with no children you can get a home within 10 miles, and an apartment 3 blocks away. Who do you think drives more, and it isn't by choice. Given, this isn't directly related as either scheme would tax people in this situation more than people that live closer, but it is still an issue with our current system.

Last, it would help if you stated the solution you're looking for. It doesn't seem to be the same one the State is looking for based on your comment.

RE: Simpler solution
By FITCamaro on 12/31/2008 1:43:36 PM , Rating: 2
With a mileage tax though, your second point would still favor the wealthy though since they drive less as they live closer.

There really is no way to better this situation. Short of taxing the rich a higher rate per mile than those who are poor. Which I wouldn't put past our government. Because we gotta punish those rich people you know. Damn them for being successful.

One thing I haven't seen anyone mention is the increased number of unregistered vehicles this would put on the road as people are unable or unwilling to pay the mileage tax.

RE: Simpler solution
By ZmaxDP on 12/31/2008 4:41:16 PM , Rating: 2
Exactly what I was trying to say at the end of that paragraph. Either the by mile or by gallon tax don't address this problem directly, though charging by mile would theoretically reduce the tax burden somewhat on less efficient older vehicles.

What I'd like to see are some construction incentives from the new administration to encourage urban mixed use development. This would be a much better expenditure of 700 billion dollars than the current program they've picked...

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