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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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RE: why?
By ZmaxDP on 12/31/2008 1:55:54 PM , Rating: 2
Please correct: "The only fair tax is income tax."

Should be: "The only fair tax is no tax."

Income tax as it now stands is certainly not "fair" as I see it. I think a flat income tax would come close to being "fair", though I don't think it is completely "fair".

I could make an argument that sales tax is more "fair" than any income tax if I wanted, though once again the current system would need major revision to be truly "fair".

To me, fair means equal taxation, or just taxation. Still there are issues, is a head count tax equal? Technically, yes. Everyone pays 100 dollars a year. Done. Do I think that is fair? No. Everyone pays 10% of their income seems equal, just, and fair to me; but I can't claim to have researched it fully enough to say for sure (in my opinion).

We also need to ask the question, do we even want a "fair" tax? (Not to mention the oh so semantic - define "fair".) A "fair" tax taxes criminals the same as innocents, taxes rich the same as poor, taxes sick the same as healthy, etc...

Is it "fair" to use sales tax to tax a homeless, unemployed man when he buys cigarettes? What if he's buying a coat? Or Milk? Is it "fair" then? Maybe it is to me, but it may not be to you.

No tax scheme is truly fair as they all favor someone or some situation. There is bias in everything. Throw in the challenge of public opinion which seems to favor over-taxing the rich and under-taxing the poor on income taxes, and you've got the opinion problem too. The best tax isn't a fair one, it is the least unfair one to the most people.

(Not the most advantageous one for the most people which is what we've got now! This is why lower income tax percentages for the poor is a problem. They don't pay much in income taxes, but receive a lot of the services it pays for. So it is easy for them to say raise taxes for more services, they don't pay for them anyway. If those services were coming equally out of their paychecks, they'd be either more restrained in calls to raise taxes or much harder to ignore because they would be paying for them too.)

"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il
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