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New Government Report Backs Car Mileage Tax

A new government report backs federal mileage-based user fees, which drivers would have to pay at tollbooths.

In fact, the federal government is becoming increasingly convinced that mileage fees are a great way to raise spending money, as much as $78 billion annually, says the new report from the Government Accountability Office.

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Especially as the government sees gas tax revenues drop as it pushes green energy electric cars. Electric car drivers would have to pay the mileage fees as they don’t know pay gas taxes. Trouble is, drivers of cars and trucks running on regular gas may have to pay the mileage fee on top of gas taxes, too. States like Oregon and Minnesota have already experimented with these mileage fees.

How much could the new fee cost you? More than regular gas taxes, anywhere from $108 to $248 annually, compared to the average $96 “drivers currently pay in federal gasoline tax,” says the GAO.

How much dough could the government collect?  GAO says to replace current federal fuel tax revenues, the new mileage fee would have to raise $34 billion. But since the government wants to spend even more to maintain the highway system and improve “performance,” the fee must raise $78 billion, the GAO says.

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The new fees are likely coming because Congressional Budget Office has already projected in January 2012 that the federal Highway Trust fund will start to go broke this year. The fund finances road projects using the federal gas tax, which raises an estimated $36 billion annually. The revenue from mileage fees could even “be set to replace or supplement current highway trust fund revenues,” the GAO says.

Even the head of Amtrak says the federal highway trust fund is in worse shape than, well, Amtrak. “In the past four years, the federal government has appropriated $53.3 billion from the general fund of the Treasury to bail out the highway trust fund,” Amtrak Chief Executive Officer Joseph Boardman said in testimony at a congressional hearing last September. “That’s almost 30% more than the total federal expenditure on Amtrak since 1971. Revenue generated from highway users accounted for only 45.7% of total funding available for highways in 2010. The rest came from taxpayers.”

So instead of taxpayer bailouts, taxpayers will have to pay more fees to drive around. More than half of all states back a federal test of mileage fees for trucks and electric cars, says the GAO. Many states “would support federal actions to evaluate mileage fees,” says the GAO.

But there are still lots of problems that could put the brakes on the idea. The GAO says mileage fees “continue to face significant public concerns related to privacy as well as cost challenges.”

Meaning, for government officials to collect these fees, you’d have to install those GPS systems at your own expense, so the government could track your road use. “Implementing a system to collect fees from 230 million U.S. passenger vehicles is likely to greatly exceed the costs of collecting fuel taxes,” the GAO says.

Already, government officials in a number of states are test-driving ways to track miles traveled via consumer smartphones that link to onboard devices — such as GM’s OnStar, Ford’s SYNC, Nissan’s CARWINGS and Toyota’s Entune.

All of this raises “privacy concerns” which “are particularly acute when global positioning system units are used to track the location of passenger vehicles,” the GAO says.

Despite the problems, the GAO says the U.S. can look overseas to see how great mileage fees work in other countries, especially on trucks. Which means any company that relies on the trucking system could in the future have to spend a lot of money on new GPS systems and the fees. Think Fedex, UPS, all of the major trucking companies, as well as the fuel industry which transports fuel via trucks.

“Germany and New Zealand have achieved substantial revenues and benefits such as reduced road damage and emissions with fewer privacy concerns” after those countries installed trucking mileage fees, the GAO says, adding, that two states with such trucking fees had fewer privacy and cost concerns than passenger fees.

Here’s another reason why truckers are vulnerable. “In 2000, the Federal Highway Administration estimated that heavy commercial trucks generally pay less in federal taxes than the road damage costs they impose,” the GAO says, adding, “Adjusting mileage fee rates to account for vehicle road damage costs would increase rates for commercial truck users.”

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