Tax Coming On The Personal Miles You Drive?

The industry of transport is a rapidly changing one and this is giving change to the tax code. One new initiative wants to tax you on the personal miles that you drive. 

You might have heard by now that we have an infrastructure problem to go along with everything else. The problem in this case is much of the infrastructure related to transportation in this country [bridges, roads, freeways, etc.] is paid for by an 18.4 cent tax on every gallon of gasoline we pump into our cars. So what is the problem with this approach now? In one word – efficiency.

The gasoline tax was passed long ago when we were driving land whales, SUVs and the like. The incredibly poor mileage meant we had to fill up the tank frequently and that meant a lot of gasoline tax revenues that could be used on transportation infrastructure. As you’ve undoubtedly noticed, things have changed. 

There are serious concerns about where oil is headed. Much of the light sweet crude in the world have been fully tapped. There is plenty of heavy, nasty stuff, but it isn’t easy to get or refine. We will have oil for the foreseeable future, just not as much and at much higher prices. 

Your government has already started planning for this even if you don’t realize it. The hybrid industry took off almost solely because the government offered huge incentives to people who bought the cars. The same is now being done with electric cars. On top of all this, the government is mandated that car fleets get much better gas mileage in the future or face severe fines. 

All of this efficiency means we may drive the same amount, but we go to the pump less often. This means less gas being pumped, and fewer gasoline tax revenues that can be used to fix and modernize infrastructure. The bridge collapse in Minnesota that made big news is soon to be repeated many times if we don’t do something. 

What is the answer? The Congressional Budget Office is looking a proposal that would tax us on the miles we drive, not the gasoline we consume. The initial proposal calls for a tax of just less than a penny a mile driven. Before you get outraged, this would mean paying $100 a year in tax for a person who drives 10,000 miles annually. Whether this will be in addition to the 18.4 cent a gallon tax or replace it is currently unknown. Regardless, just be aware there is a new tax coming down the road, probably one of many.