Mustang Parts
   Carrying Saleen wheels and Bullitt wheels.

Friday, March 16, 2012

Replacing Gas Taxes

GM has an open letter on its blog, here, opposing pending legislation in Washington (State) which levies extra fees on EVs to compensate for lost gas tax revenue. 

GM correctly argues that adding fees on EVs will discourage people from buying them.  However, lost gas tax revenues are looming problem.  As gas cars become more efficient, and some people switch to hybrids and pure EVs, revenue from gasoline sales will drop significantly.   Federal and state gas taxes are generally used to maintain the roads.

So there needs to be a "technology neutral" way to fund road repair.  I think a sensible solution would be to drop gasoline taxes entirely, and fund roads through some sort of usage fee that all cars would pay.  There are many ways to do this:

  • Mileage based fees, which can be collected annually at registration renewal.
  • Higher registration fees.
  • Digital toll roads using license plate reading cameras or RFID
  • Extra sales taxes on new car sales
  • Taxes on electricity used to charge EVs (smart metering)

Each of these has advantages and disadvantages.  The nice thing about gasoline taxes is that the fees are collected gradually.  A camera based toll system could work this way, charging your credit card every month for approximate miles driven, however the required infrastructure and privacy issues would be significant. 

Putting the motoring tax on tires is an interesting concept--all cars and trucks, no matter what the powertrain technology, consume tires.  The problem is, tires last a long time, so the tire tax would have to be very high to recapture lost revenue from gasoline.  Can you imagine payint $1000 extra for a set of tires?

Annual mileage based fees would be equitable, but if you imagine having to pay a year's worth of gasoline taxes at once, you are talking about a hefty bill, on the order of $500-700/year for a typical motorist.  Still, if I had to pick my favorite taxation method I think annual miles driven would be my choice.

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