George S. May Business Blog

Americans, don’t sell the Hummer just yet. Mileage Tax gaining steam

For those considering buying a fuel efficient car to save money, you may want to think again:

“Take a long, hard look at your car’s odometer. Now imagine paying a tax on each one of those miles.

A mileage tax idea is gaining steam at the state and federal level. You would pay a tax on each mile driven instead of paying a gas tax on each gallon you buy. Transportation Secretary Ray LaHood says with people driving more fuel-efficient cars and putting fewer miles on their cars the revenue from the gas tax is dropping…

Here’s what Oregon wants to do, it would spend about 32-million dollars to fit every gas pump with a chip-reader. If you have a mileage tracking G-P-S system in your car, you would pay the tax for your mileage right then. If you don’t have a chip, you would pay the gas tax. No one would have to pay both.” source

First of all, we must realize that this is not the first time that a mileage tax proposal like this has come about. California has been trying it since 2004. Can you guess how the public reacted to the mileage tax?

95.2% of California opposed it. 

What sells the majority of America on buying fuel efficient cars? While the fact that it is easier on the ozone may be an added bonus to some, it remains that people buy fuel efficient cars to save money. Take away that distinction, put in a mileage tax, and having an ecologically sound vehicle is suddenly not as appealing as it was before. In the wake of Detroit almost shutting down and Obama demanding the automakers to become more up-to-date with energy saving vehicles, doesn’t it seem like legislation like this would be a step in the wrong direction?

I am interested to hear reactions to the proposed mileage tax. Unless you drive a Hummer, then I already know your take.

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