Tanks for the Memories

The gas tax is, as you may have heard, about to run out of gas. It's not hard to see why this is happening. Motorists pay the tax based on the number of gallons they have purchased, not by the distance they travel. The more fuel-efficient cars become, the worse the levy functions as a revenue source. "For years, it worked pretty well because we had all these vehicles that all got about the same lousy mileage," says Richard Little, an expert on public finance and infrastructure at the University of Southern California. "Someone driving a hybrid at 50 miles per gallon may be good for the environment, but they're not really paying for the mileage."

The idea of taxing mileage instead of fuel is kicking around quite a number of jurisdictions these days, including the federal government, where Transportation Secretary Ray LaHood floated it recently before getting shot down (for now) by President Obama's advisers in the White House. But in the states, things are starting to happen. Oregon ran a successful pilot a couple of years ago in the Portland area, charging a little more than a penny per mile in place of the usual 24 cents per gallon. Governor Ted Kulongoski proposes ramping up the experiment, and put a $10 million request for it in his latest budget. At least a dozen other states are studying the issue.

There are more than a few kinks to work out before the mileage tax can become a common source of revenue. One of them involves privacy; many citizens say they are uncomfortable with the idea of having the government track their movements. Bernie Lieder, who chairs the Transportation Finance Committee in the Minnesota House of Representatives, disagrees with the privacy criticism and argues that this "big boogeyman" should be done away with once and for all. In his view, clocking mileage when people pull up to the pump is no more intrusive than knowing how much gas they've bought.

For now, taxing gallons of gasoline will remain the primary revenue source for transportation. But USC's Little predicts that eventually a tax based on the Oregon model is "where we're going to be. It's not going to be two years and it's not going to be five years, but within 10 years, we're going to start seeing some fairly widespread rollouts."