BilikFamily.com

I can't decide how I feel about this one, but I can't help but feeling a bit like a victim of bait and switch. The state of Oregon is experimenting with a mileage tax. The incentive behind this is:

1. As consumers buy more fuel efficient cars, they'll use less gasoline.
2. States collect taxes from gasoline, so if less gasoline is sold, the state will collect less tax revenue, all else being equal.
3. States can ill afford a drop in revenue as those funds pay for road repairs.
4. Thus we must find a new way to tax drivers to make up for this lost revenue.

So here we would have consumers who might be moving to more efficient, perhaps even hybrid, cars paying proportionately more. They might be doing it for the environment, to reduce dependency on foreign oil, or just to spend less at the gas pump. Any of those reasons would be a noble reason. I just find it ironic that the moment consumers look to conserve resources, the government would shift the base of taxation because good behavior reduces their revenues. I often wonder what the government would do if we had a drug that immediately squelched people's desire for tobacco products. What about all that revenue from tobacco taxes?

I admit that taxing based on mileage is a flatter and arguably fairer way. It more closely approximates a road usage tax. In a sense, though, it increases the incentive to drive a bigger, less efficient car. If miles gets taxed the same whether I drive a Prius or an BMW, I'd have more incentive to go with the latter. (not that I can afford the sticker price of the BMW, but...)

Ultimately car choice stems from numerous factors. The government has to make a prioritization between reducing gas usage and paying for roads. Taxes always distort behavior. Sometimes it's incidental, sometimes it's intentional. Moving to a mileage tax shifts the priority towards road funding and in a limited way de-emphasizes gas efficiency in vehicle choice. I wonder what the various environmental groups think about this Oregon experiment.