States, cities revive mileage taxes as transportation revenue dwindles

Several states are considering mileage taxes as more efficient vehicles, and increased public transportation ridership add to downward pressure on state revenues. Some municipalities are also looking at taxes including San Francisco which recently launched a study to determine the feasibility of such a tax.

Last month, the state of Florida started looking for a replacement line of revenue to make up for what it is losing on the gas tax as its Transportation Trust Fund continues to dwindle. The trust fund pays for highway infrastructure improvements and other transportation needs throughout the state by taking a small fee per gallon of gas purchased. However, more fuel efficient cars and increased transportation options have made a significant dent in the revenue the state derives from its gas tax.

Massachusetts is also looking at a similar option after budget data from the Massachusetts Bay Transportation Authority shows that the Authority will loses $161 million this year and $100 million next year, even though ridership is at an all time high. In response to the gap, state officials are considering a variety of measures including a 43% fare increase and a $0.01 tax on vehicle miles traveled. Service cuts are also being proposed.

The story is much the same in San Francisco where officials have approved a feasibility study for a mileage tax. However, city officials say the move is less about revenue and more about environmental sustainability. Unlike the state plans, which would have drivers report mileage to the tag office during a renewal, city officials would require drivers to install digital odometers that report mileage and pay between $0.01-0.10 per mile.

While mileage taxes themselves aren’t new as an idea, they do raise some interesting questions in the age of fuel efficiency and technological snooping. In a piece on the Boston plan Andrew Meggison of Gas2 notes that while the mileage tax may help continue to pay for services like public transportation, the service cuts in the short term will increase cars on the road adding to congestion and pollution. Moreover, the proposed tax appears to pay only to keep the trains running, not to also pay for much needed repairs and upgrades to the system which is the oldest in the country.

There is also a federal gas tax motorists have to contend with so state increases will come alongside that. If Bay Area officials got their way for example, drivers in San Francisco could be looking at federal, state and local levies amounting to $0.30 in gas and mileage.

The other question raised by the San Francisco proposal is one of privacy. Reporting a blind mileage number when renewing vehicle tags offers little to no data about the activities of citizens. However, being required to install an odometer that reports mileage to city officials raises questions about the reach of government observation. Arguably the same data is already being reported to cell phone providers, however, those contracts are opt-in. In an Associated Press account, local officials claim they have no interest in where local residents are going, just how far they are going so that taxable mileage is being fully reported.

Most of these tax plans are likely to take between 5-10 years to implement. Putting them that far into the future may also present officials with a holistically different transportation picture than they see now. It’s hard to imagine the viability of such user fees in light of recent gas spikes or some economic projections which raise the possibility of $4 per gallon gas within that same time horizon. Although, they may also become even more important given the dire transportation and infrastructure picture already in place. Stay tuned.

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