Taxing Vehicle Miles Traveled

As we wean ourselves off gasoline with alternative energy means ( electric, hydrogen or whatever), there will be a need for supplanting the current gasoline tax. A program is currently underway that proposes to install GPS computers in each and every road vehicle to measure vehicle miles traveled for the purpose of taxing such mileage (http://www.roaduserstudy.org/). You would be billed periodically for your use of the roads. This elaborate system would run well into the billions of dollars and present invasion of privacy issues.

This proposed GPS system is totally unnecessary. All vehicles (cars, trucks, busses, motorcycles) on the roads today have recorders of vehicle miles traveled. These recorders are rugged, reliable and tamper-proof. They are called tires. You want to tax vehicle miles traveled? Tax tires.

Proponents of the GPS computer scheme claim that high usage roads could be charged at higher rates. A system for doing that is already in place; it uses toll booths.

Now some people might tend to drive conservatively, within the speed limit, slowing down for curves, etc so as to get more mileage out of their tires, but think of this as a reward, like a charitable deduction on your income tax. Others may get less mileage by driving aggressively, speeding, cornering fast, etc. Think of this as sin tax. Tires on a Lincoln may not wear as well as those on a Ford Focus; think luxury tax. It all sort of makes sense, doesn’t it?

Overall, there would be increased economic pressure to buy vehicles with high tire life; they, of course, would be small and lightweight, consuming less energy.

You might think there would have to be a downside to this approach and you would be right; there is. It’s in the numbers. Let’s say you drive 20,000 miles per year and get 20 miles to the gallon; that’s 1000 gallons per year. With the current federal tax at $0.184 per gallon, that’s revenue of $184 per year. Now to get that much out of taxing tires, what would the tire tax have to be? Let’s say a set tires is good for 60,000 miles. At 20,000 miles per year, it last’s 3 years. So to get $184 per year, the tax on the set of tires would have to be $552. That’s a big chunk of dough all at once. It would take time to get used to that, so it might have to be phased in over several years as gas tax revenues decline.

With the tire tax approach, there might be a temptation to run tires beyond their safe life. Tire manufactures might need to incorporate wear indicators or alarm chips to signal owners (and police) of excessive wear. Perhaps something along the lines of red light cameras might be feasible. That is certainly more cost effective than installing an onboard GPS computer in every vehicle. Furthermore, the thought of multi-lane bumper-to-bumper commuter vehicles all continuously and simultaneously querying GPS satellites boggles the mind.

It should be noted that a federal excise tax on tires has been in effect since 1918 (except for a few years from 1926 until the Great Depression). It's scheduled expiration date is 1 October 2011. This information is taken from "Federal Excise Tax on Tires: Where the Rubber Meets the Road" available at https://www.policyarchive.org/handle/10207/957. Quoting from this source, "This excise tax is said to be easy to administer with minimal federal collection costs."

Topping it all off is the fact that the tire tax approach has no privacy issues.

In summary, the tire tax approach has the following attributes:

Zero cost
No privacy issues
No billing requirements
Simplicity
Ruggedness
Tamper-proof detectors
Detectors already installed
Reward for conservative driving
Penalty for aggressive driving
Encouragement for buying small, light vehicles