NCPA - National Center for Policy Analysis


May 3, 2005

As cars become more fuel-efficient, legislators considering ways to recoup lost gas taxes to fund road repair and construction. The state of Oregon is beginning a pilot program which would tax drivers per mile driven.

Since gas taxes are based on per-gallon purchases, the increased use of hybrids has left gas tax revenues flat for the past several years, even though people are driving more miles. As a result, states are cash-strapped for road funding:

  • Fuel taxes cover 65 to 85 percent of road use costs.
  • However, the popularity of high-mileage import cars has raised average fuel efficiency from 12 miles per gallon to 20 miles per gallon.
  • A 1,000 mile trip in a Chevy Suburban generates $12.50 in tax revenue, compared to only $4.36 for the same trip in a Toyota Prius.

Oregon's program involves installing outboard global positioning system (GPS) monitors that will record mileage data and download it into a reader at a gas pump, which will calculate the tax. Drivers will simply pay at the pump. Hence, drivers of more and less fuel-efficient cars would pay the same amount.

The initial GPS devices will only store the number of miles traveled and whether a vehicle is inside or outside the state. However, privacy advocates worry that once the technology is in place, government and law enforcement officials will use it to track individuals? whereabouts. David Sobel of the Electronic Privacy Information Center (EPIC) notes that for that reason, the system should be set so individuals can purge their information from it once they pay their tax at the pump.

Source: Craig Westover, "Oregon to Test Plan that Taxes Motorists by Miles Driven," Heartland Institute, April 2005.


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