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The Independent Institute
Commentary

Tax Based on Mileage is Unfair, Ineffective


Transportation Secretary Ray LaHood has proposed taxing drivers based on mileage, rather than gas consumption, to finance road maintenance. But White House Press Secretary Robert Gibbs has said such a tax “is not and will not be the policy of the Obama administration.”

That’s a relief. This proposal threatens the privacy of drivers. It would likely mean putting a GPS device in every car. Once the government tracks your movement for tax purposes, we are on the path to total surveillance. Even Sen. Barbara Boxer, D-Calif., worries about a “Big Brother system tracking your every move,” though she also has called the mileage tax a “brilliant idea.”

The National Surface Transportation Financing Commission proposes raising gas taxes while transitioning to a mileage tax. It says the GPS devices “can and should be designed to fully protect . . . privacy.” This is a typical promise, but government is hardly known for never abusing personal information.

Some environmentalists think the mileage tax would reduce driving and pollution. But it would actually encourage gas guzzling by reducing the price per gallon. To compensate, some propose a higher tax on cars with worse mileage. But this would effectively mean both a consumption tax as well as a new invasion of privacy.

Some argue a flat mileage tax would be fairer. Why should drivers pay based on fuel, rather than how far they drive? Would a mileage tax not better reflect how the free market would price road use?

Not necessarily. It depends on which roads you frequent. Some roads are more costly than others. Why should someone who drives entirely on local roads pay the same tax as those who drive mostly on the interstate?

What if your vehicle is twice as heavy as others, causing more wear and tear on the roads? If government planners try to compensate for such factors, the system would become even more invasive and arbitrary.

A free market in road maintenance would seek ways to charge you based on your actual use with minimum invasiveness.

The government, however, cannot mimic the market. It can only distort it. Being a monopoly and the enforcer of laws it routinely violates itself, government cannot perform economic calculation like the market and cannot be trusted with knowing how far we drive or where we go.

Instead of a federal mileage tax or higher national gas taxes, the feds should butt out. Half the roads in the 19th century were built without taxation. Washington assumed its current dominant role under President Dwight D. Eisenhower. Within a couple of years, the interstate highway system morphed into something far more expensive, disruptive and poorly planned than Eisenhower had ever intended.

Roads built and maintained by local communities and private companies would have an incentive to provide faster and safer transit, at a fairer and more affordable price.

How would the public respond if 40,000 Americans, or even a fraction of that number, died every year on private roads? The private firms would be vilified. Outraged politicians and journalists would demand hearings, taxes and regulation.

That so many Americans die every year on government roads is simply accepted as a fact of modern life. Boxer points to the 2007 Minneapolis bridge collapse that killed thirteen people as a reason for more government spending on roads. But no one would react to such a tragedy on a private road as a reason to give the company maintaining the road more money and power.

The transportation secretary proposes a bad idea. Americans should not surrender more of their personal information to Washington and the expanding U.S. surveillance state.


Anthony Gregory is Research Fellow at The Independent Institute. His articles have appeared in the Christian Science Monitor, Bloomberg BusinessWeek, San Diego Union-Tribune, Portland Oregonian (AZ), Contra Costa Times, The Star (Chicago, IL), Washington Times, Salt Lake Tribune, Tallahassee Democrat, Albany (NY) Times Union, Raleigh News and Observer, Florida Today, and other newspapers.

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