Road Usage Tax to Replace Gas Tax

December 11, 2014 | By: TaxCure Staff

states consider road use taxesWhile environmentalists and others probably applaud the increasing numbers of hybrid and electric vehicles on the roads, some states are finding a new problem with these types of cars: falling revenue.

With fewer cars using gasoline, and with cars getting better gas mileage in general, many states are finding that they are losing revenue related to gas taxes. A significant portion of what you pay at the pump amounts to state and federal taxes, and many states use the taxes they collect on gas in order to help maintain roads. State budgets, many still cash-strapped from the effects of the recent recession, aren’t responding well to the difficulties involved in maintaining public roads with dwindling gas tax revenues.

One state looking to address that problem is Washington.

Paying Taxes on Miles Driven

Many states already supplement their road maintenance coffers with help from toll roads. However, that might not do the trick, either. In order to ensure that those who use the roads are paying for their maintenance, Washington state is introducing a pilot program designed to track miles driven and then levy taxes based on usage, rather than relying on the gasoline tax.

According to King5’s news website, a pilot program for a tax on miles driven has just been approved. However, policymakers acknowledge that few citizens are happy when they are taxed without any sort of choice. As a result, there are four different options available to citizens subject to the tax:

  • Flat fee, allowing you to drive as much as many miles as you want, without paying for each mile.
  • A reporting situation in which taxpayers report odometer readings to the state.
  • Having a GPS locator installed in the car so that the state can track miles driven.
  • Downloading a smartphone application that will track miles driven.

Some taxpayers are concerned about the GPS/locator options, even though policymakers insist that they would only be used to track the number of miles driven, and not be used to keep data on where drivers have been.

For now, the pilot program has just been approved. Testing under the program wouldn’t actually start until 2016. If all goes well, Washington state might implement the tax for miles driven by 2018.

Does This Make Sense in Other Areas?

One of the justifications for the program is that it taxes citizens based on their usage of the roads provided to them by public sources. There are others who think that it makes sense for taxpayers to have more “say” in how their taxes are used. There are different suggestions that a portion of a tax bill be assigned by taxpayers. While there are some items that, for the public good and general welfare, are likely to be funded as much as possible, there are also discretionary budget items that could be based on taxpayer support. With our technology advancing, it’s possible to better accommodate these discussions and even allow taxpayers to earmark portions of their payments.

Additionally, for some public services, it might make sense to levy taxes based on usage. Sales tax and travel tax are two examples of taxes that are levied based on how citizens spend their money.

A tax levied on those who drive more — using public roads more — might make sense when you think about it this way. With changes coming in the way we travel, it makes sense to change the way we are taxed.