Mileage based road use taxes

[Chuckanut]

As the number of pure EV's and very fuel efficient hybrid automobiles increase states are finding their traditional way of paying for road maintenance, the gasoline tax, is not keeping up with the wear and tear on the roads. Right now the patch is to charge an extra license fee on pure EVs and hybrids.

My home state is going to do a voluntary trial run of a mileage based road use tax in the next few years. The hope is to replace the gasoline tax with the road use tax. Exactly, how that will be run is not well defined at this time. Hopefully, we will learn something useful.

Your thoughts on how to fairly administer a mileage based road use tax that will replace the gasoline tax are welcome.

 

[GenXguy]

One thing likely is that it's going to amount to a tax increase.

They have really hiked the gas tax in my state, and have even indexed it to inflation. They probably look at ideas like this as just another way to increase taxes, yet again.

 

[Chuckanut]

One thing likely is that it's going to amount to a tax increase.

They have really hiked the gas tax in my state, and have even indexed it to inflation. They probably look at ideas like this as just another way to increase taxes, yet again.

The commission that looked into it in my state noted that the new mileage tax as currently being looked into is NOT constitutionally limited to road maintenance and repair like the current gas tax is. OTOH, the plan is also not yet final.

Here's an article on the proposal and what some people think of it.

https://www.nwpb.org/2021/02/19/pay...in-washington-legislature-to-augment-gas-tax/

Washington state senators have teed up a mileage-based tax for electric and plug-in hybrid vehicles as the first step toward changing how the state pays for road maintenance and other transportation needs. Policymakers expect gas tax revenue to decline long term. Oregon has been experimenting with a per-mile charge for years.
Right now, Washingtonians who own fully electric cars pay an extra $225 annual registration fee. A proposal by state Sen. Rebecca Saldaña (D-Seattle) would replace that flat fee beginning in July 2026 with a mandatory 2 cents per mile road usage charge for electric cars and plug-in hybrids.

 

[Montecfo]

It seems like a lot of new administration. I think it preferable to just increase the gas tax and separately assess EVs. Clean and simple without new admin.

I also worry with a mileage based tax you will end up with both a gas tax and a mileage tax.

Taxes once instituted seldom go away.

 

[2017ish]

If, for example, more than half your mileage is out of state, how to administer--in the absence of real-time tracking? I guess the state could just establish a near-irrebuttable presumption that all usage is in-state?

 

[Walt34]

If, for example, more than half your mileage is out of state, how to administer--in the absence of real-time tracking?

I mentioned this issue in another thread that touched on it. Where we live in the Eastern Panhandle of West Virginia, Maryland and Virginia are 20 minutes away and Pennsylvania is 25-30 minutes away so naturally we do a lot of driving in other states. Even now, DW is in MD babysitting a 2-year-old grandniece. She's closer to Annapolis than she is to home. An R/C model airplane club that I'm a member of is in Winchester, VA so I'm there often. Other examples abound of course.

If WV even thinks about (and I seriously doubt they would) taxing drivers on all of their mileage driven they're going to have a fight on their hands, not only from me but from about everyone in similar circumstances. The privacy objections to using GPS monitoring to track in-state mileage are obvious, so I doubt that would fly either.

I just don't see a fair and viable solution to the issue right now.

 

[MC Rider]

It should be weighted based on weight.


Beacause big trucks wear the road way faster than small trucks, which are in turn worse than cars, motorcycle, and bicycles etc.

 

[CardsFan]

Funny how the Law of Untended Consequences all ways catches up with us.

Gas tax was simple, easy, and pretty fair back AGES ago (like 10 years). EV's, high mileage hybrids and other changes have made it clear that it CAN be unfair.

How do you fix it? IMHO, the govt. has no right to know how much I drive, where I drive, or when I drive. Yeah, I know there are tollways and such that can calculate some of this, but I have no intent or obligation to provide it to them.

I don't know if the new mileage taxes will get enacted and work, but I am guessing the lawyers will make a bundle.

 

[yakers]

If, for example, more than half your mileage is out of state, how to administer--in the absence of real-time tracking? I guess the state could just establish a near-irrebuttable presumption that all usage is in-state?

But gas tax is paid now when gas is purchased not where driven, although some states do require heavy trucks to buy fuel in state.

 

[retire48in2018]

I do NOT like anything that opens more areas / ways to tax, period.

Politicians can not be trusted to not continue to open up taxes more and more.

Remember -

Congress enacted an income tax in October 1913 as part of the Revenue Act of 1913, levying a 1% tax on net personal incomes above $3,000, with a 6% surtax on incomes above $500,000.

That’s where it started vs now with payroll (SS), and Medicare, income, gas …..

They can’t control themselves.

Eliminate the gas tax. Fund roads via other methods - don’t give them another way…

Ok, I’ll get off my soapbox now….

 

[retire48in2018]

Other existing ways - not other new ways.

 

[ownyourfuture]

Minnesota has had an annual Electric Vehicle Surcharge (added to annual registration fees (tabs/stickers) since January 1, 2018.

Annual registration 'fees' on a new vehicle are $10.00 + 1.25% of the manufacturer’s suggested retail price, excluding destination charges.
$375 on a new $30,000 vehicle. They drop a certain % every year until after 10 years, you (or whoever owns the vehicle at that time) pays the minimum of $35.

I only mention registration fees, because at least in my state, it appears that's not enough. The current governor wanted to base the 1.25% registration tax on 160% of the sticker price on every new car sold. Tabs/stickers would be $600, instead of $375 on a new $30,000 auto. I haven't found out for sure, but I can only hope that it wasn't included in the new budget. Motor Vehicle Sales Tax increased from 6.50% to 6.875% July 1, 2023

 

[SecondCor521]

Chuckanut, I am curious: Has the state attorney general opined on the state (or federal) constitutionality of tracking people's vehicles in order to properly assess the road use tax? I understand the pilot program is voluntary, but I think very few WA citizens will volunteer for hassle and cost and loss of privacy in order to pay more taxes.

 

[Midpack]

OP: You were involved in this discussion in the EV thread a month ago with many suggested approaches, there is no easy obvious answer or it would be implemented already - what’s your solution?

I agree EVs should pay their fair share, but gas taxes have never been adequate to fund roads for 70 years! Let’s solve both instead of creating a complex system singling out EVs?

While a fair discussion, EVs are a very small part of the problem of underfunding highway construction and maintenance - an issue decades in the making.

Many Americans believe that drivers pay the full cost of the roads they use through gas taxes and other user fees. That has never been true, and it is less true now than at any other point in modern times. In the 1960s and early 1970s, gas taxes and other fees on drivers covered more than 70% of the costs of highway construction and maintenance. The share of transportation costs covered by gasoline taxes is likely to continue to decline as a result of inflation (gas taxes are not indexed for inflation), more fuel-efficient cars, EVs, and slower growth in driving.

Although it varies dramatically among the states, in the US gas taxes only fund about one-third of the cost of construction and maintenance of state & local roads.
34% - Gas taxes
21% - License & registration fees
15% - Tolls
30% - Additional funds from state general funds - e.g. income & sales taxes.
Only 4 states raise enough revenue through gas taxes, license fees and tolls to cover their highway spending (CA, IN, TN, MT). AL and ND only cover 17% and 29% respectively.

https://taxfoundation.org/state-infr...ture-spending/

 

[Koolau]

I do NOT like anything that opens more areas / ways to tax, period.

Politicians can not be trusted to not continue to open up taxes more and more.

Remember -

Congress enacted an income tax in October 1913 as part of the Revenue Act of 1913, levying a 1% tax on net personal incomes above $3,000, with a 6% surtax on incomes above $500,000.

That’s where it started vs now with payroll (SS), and Medicare, income, gas …..

They can’t control themselves.

Eliminate the gas tax. Fund roads via other methods - don’t give them another way…

Ok, I’ll get off my soapbox now….

Blaming politicians for spending OUR money to buy OUR votes is like blaming the tiger in the zoo who bites the kid's hand who stuck it through the cage bars. We vote for 'em so we "own it." Now, having said that, I'll whine with the best of 'em about politicians. BUT in my heart, I know who's fault it really is. Of course, differing opinions to this editorial are welcomed as YMMV.

 

[Midpack]

I do NOT like anything that opens more areas / ways to tax, period.

Politicians can not be trusted to not continue to open up taxes more and more.

Remember -

Congress enacted an income tax in October 1913 as part of the Revenue Act of 1913, levying a 1% tax on net personal incomes above $3,000, with a 6% surtax on incomes above $500,000.

That’s where it started vs now with payroll (SS), and Medicare, income, gas …..

They can’t control themselves.

Eliminate the gas tax. Fund roads via other methods - don’t give them another way…like what?

Ok, I’ll get off my soapbox now….

Blaming politicians for spending OUR money to buy OUR votes is like blaming the tiger in the zoo who bites the kid's hand who stuck it through the cage bars. We vote for 'em so we "own it." Now, having said that, I'll whine with the best of 'em about politicians. BUT in my heart, I know whose fault it really is. Of course, differing opinions to this editorial are welcomed as YMMV.

Being careful here.

I can't remember a politician or candidate from any party that didn't spend our money mostly however their major donors wanted them to. There used to be a mainstream party that might spend less, but that's no longer true either. So WE don't have much choice...special interests decide with few exceptions.

But let's not hijack the thread, I hope the mods will strike all three posts...

 

[Chuckanut]

Chuckanut, I am curious: Has the state attorney general opined on the state (or federal) constitutionality of tracking people's vehicles in order to properly assess the road use tax? I understand the pilot program is voluntary, but I think very few WA citizens will volunteer for hassle and cost and loss of privacy in order to pay more taxes.

To my knowledge the state AG has not issued an opinion.

 

[CRLLS]

I believe that the government's consistently increasing corporate MPG goals over the last few decades essentially brought the gas tax shortcomings in covering the cost of road maintenance. It is one of the unintended consequences of MPG. Additionally. the government's push toward EV's has done even more damage to the road funding tax machine. Some states have implemented the EV annual "use tax" to provide some sort of equity, but it is far short of actual equity.

I hope that whatever method is eventually chosen, it is applied to gasoline powered vehicles and electric vehicles as well as including some forward looking way toward all alternative fueled vehicles. Essentially ending up with one set of tax rates for all vehicles.

 

[Chuckanut]

OP: You were involved in this discussion in the EV thread a month ago with many suggested approaches, there is no easy obvious answer or it would be implemented already - what’s your solution?

I agree EVs should pay their fair share, but gas taxes have never been adequate to fund roads for 70 years! Let’s solve both instead of creating a complex system singling out EVs?

While a fair discussion, EVs are a very small part of the problem of underfunding highway construction and maintenance - an issue decades in the making.

A
Only 4 states raise enough revenue through gas taxes, license fees and tolls to cover their highway spending (CA, IN, TN, MT). AL and ND only cover 17% and 29% respectively.

https://taxfoundation.org/state-infr...ture-spending/

I started a separate topic because the mileage tax as proposed in WA state will affect all vehicles. It is NOT unique to EVs,

EVs, full and hybrids, have brought it to the forefront especially since WA state has outlawed the sale of ICE engine vehicles starting in 2030.

 

[Koolau]

Being careful here.

I can't remember a politician or candidate from any party that didn't spend our money mostly however their major donors wanted them to. There used to be a mainstream party that might spend less, but that's no longer true either. So WE don't have much choice...special interests decide with few exceptions.

But let's not hijack the thread, I hope the mods will strike all three posts...

Strike away. Not the first time.

 

[MarieIG]

I would probably deal collecting taxes on the EVs a bit differently, i.e. a point of purchase tax based upon usage of electrical use, rather than a milage tax.

For example, a tax could implemented quickly on the charging stations. EV/ hybrid EV owners could be required to install a separate meter for their income charging stations within their home, and the taxes would be a separate line item on the electric bill. This could be phased in, starting with commercial vehicles.

In addition, as the EVs take from the electric grid, I would allocate a portion of the EV taxes towards grid maintenance, installation of charging stations, etc. I would leave the gas tax in place, however as revenues from the gas tax decrease, and revenues from the EV tax increase, more of the income from the EV tax could be used for road maintenance, to the extent necessary.

As it stands, a certain amount of taxes are allocated by the federal, state and local governments for infrastructure, and there are also tolls.

I do have concerns about one state charging a tax for travel done in other states.

 

[Koolau]

Please don't think I am suggesting this as I already don't like all the subsidies for EVs, but with that in mind, I'm surprised states don't just up the gas taxes for those still driving ICE cars. The current gummint emphasis on EVs seems to be: Make ICE more expensive (like upping CAFE standards) and EVs cheaper by subsidies.

Taxing ICE cars more (for instance, gas tax) seems to be another logical way to "convince" people that they should buy an EV.

Again, I don't like this idea, but it fits the logic that we're using for EV adoption (IMHO.)

 

[Midpack]

I started a separate topic because the mileage tax as proposed in WA state will affect all vehicles. It is NOT unique to EVs,

EVs, full and hybrids, have brought it to the forefront especially since WA state has outlawed the sale of ICE engine vehicles starting in 2030.

Fair enough. Sorry, carry on.

I would like to see a comprehensive solution versus only 'what to do about EVs.' Again, I am not at all against a mechanism to ensure all vehicles support road construction and maintenance in some reasonably equitable manner (don't let the perfect be the enemy of the good). I applaud the 33 states that are at least charging EVs annual fees (additional registration, license and/or personal property) in lieu of gas taxes in the meantime. Evidently some are actually overcharging EV owners (some are paying more in annual fees than gas taxes would have netted with their mileage), while others aren't.

 

[USGrant1962]

It should be weighted based on weight.


Because big trucks wear the road way faster than small trucks, which are in turn worse than cars, motorcycle, and bicycles etc.

Note that due to the batteries, EVs are quite a bit heavier than comparable ICE vehicles as well.

 

[Midpack]

It should be weighted based on weight.

Beacause big trucks wear the road way faster than small trucks, which are in turn worse than cars, motorcycle, and bicycles etc.

Gas taxes are already generally higher for all vehicles that use gasoline or diesel in that weight is a primary factor in MPG, so heavier vehicles use more fuel and pay more gas taxes as a result. “Big trucks” pay slightly more per gallon as well, the federal excise tax on gasoline is 18.4 cents per gallon and 24.4 cents per gallon for diesel fuel. In addition, many but not all, state diesel fees are higher per gallon than gas taxes.

How much would be fair?

https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States