Not many people can explain in detail how our tax code actually works. But if the public goods and services that were funded by those taxes suddenly lose their funding, everyone will have something to say.
For example, many of you probably (hopefully) know that taxes fund our public roads. But perhaps relatively few people know that the federal government’s Highway Trust Fund (HTF), established in 1956, is responsible for banking our shared roadways. Without it, roads will not be able to retain maintenance funding.
But HTF risks losing most of its funding as internal combustion engines are phased out. why? This is because gasoline taxes currently cover 80 percent of HTF.
The question is: What will replace the gas tax to ensure that our roads and highways continue to receive the maintenance they need?
Some states, such as Oregon, are already testing new methods of paying alternative taxes for electric vehicle (EV) owners.
The future of mileage travel tax
The federal government has proposed using GPS tracking to collect data on how many miles people drive.
However, like Oregon, states are choosing to treat future road and bridge maintenance as a state issue, rather than waiting for the federal government to finalize and roll out a plan.
A wise choice considering Oregon has approximately 74,000 miles of roads and 8,000 bridges. There is a lot of infrastructure that needs to be maintained.
Under their plan, OreGO drivers will be charged 1.9 cents for every mile their vehicle travels. Every cent raised by OreGO goes directly to the Oregon Highway Fund.
For some context, Oregonians currently pay 38 cents per gallon in fuel taxes. But with state mandates to make all vehicles on the road zero-emissions by 2035, fuel tax revenues will quickly begin to dry up. However, Oregon plans to raise its fuel tax rate to 40 cents per gallon in 2024.
Similar to the federal government’s idea of tracking mileage with GPS, Oregon also plans to connect GPS trackers to a vehicle’s OBD II port to see how many miles you drive on your roadway.
EV owners won’t like what happens next
Big Brother uses these incentives to push the nation in a more EV-friendly direction, so many EV buyers are beneficiaries of large government subsidies.
However, as the early days of EVs come to an end and the number of gas-powered cars seen on the streets begins to decline, the EV tax credit will no longer exist.
Many of these EV incentive programs are already at risk of being cut. The more widespread EVs become, the less economically viable they become.
There would also be significant privacy issues associated with closely tracking every mile of civilian driving.
A potential solution to privacy concerns is to have a third party oversee these pay-as-you-go mileage programs. You will also need specific rules about how long this data can be stored and who can access it.
But one thing is certain: road maintenance faces an uncertain future once the new mileage tax system is fully developed and integrated.
sauce: (Autoweek).