January 3, 2009

Re: Gas Tax Increases Are Coming Down the Road

Justin Katz

I think what I find most distressing about the reports of potential transportation-related tax increases that Marc mentioned this afternoon is that nobody is even hinting at the possibility of increasing money for such a basic government function as transportation infrastructure by taking it from less fundamental government functions. (Pick your favorites.. or rather, your least favorites.)

Of course, I don't intend the above to detract from the plethora of other distressing factors. Take, for instance, the fact that a strategy of increasing taxes to compensate for revenue lost because of conservation shifts the burden directly to those who cannot conserve — namely, folks who must use gasoline directly or indirectly in support of their jobs. If a lowly carpenter like me must bear more of the burden of fixing our roads because I have no choice but to drive my van full of tools for at least an hour-and-a-half per day, then prices will go up across the economy, and competition will go down.

Then, of course, there's this:

According to a draft of the financing commission's recommendations, the nation needs to move to a new system that taxes motorists according to how much they use roads. While details have not been worked out, such a system would mean equipping every car and truck with a device that uses global positioning satellites and transponders to record how many miles the vehicle has been driven, and perhaps the type of roads and time of day.

That such a notion would make it beyond a mere thought spoken out loud during a meeting indicates the dangers that our freedoms face in the future. Just as there will always be an excuse not to shift government expenditures from extras back to essentials, there will always be a reason that our liberty — notably our liberty of movement — can be circumscribed just a little bit more tightly.

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Individual download GPS is easy - less than $100 buys a decent portable automotive GPS. Explain please how you are going to do the data logging for uploading position of individual cars? Tell me the costs and tell me why the government needs to know at that level of detail? Tell me what organs of government - or businesses - get access to this information and what safeguards apply? And tell me why I should believe anything you say (not you Justin - addressed to whoever is selling this steaming pile). Lastly, care to bet how many weeks it will take for the usual digital anarchists to hack and/or spoof the system. It is, after all, our moron government who will be implementing this.

Tell me again why a reasonably tamper proof odometer won't achieve most of what is desired, and with far less complexity and cost.

Posted by: chuckR at January 3, 2009 10:52 PM

Interesting enough the State of Oregon has been addressing and researching taxing miles driven for the pass 10 years.

In Oregon's pilot program (2006 to 2007), officials equipped 300 vehicles with GPS transponders that worked wirelessly with service station pumps, allowing drivers to pay their mileage tax just as they do their gas tax. The test, which involved two gas stations in the Portland area, proved the idea could work.

“Though the GPS devices did not track the cars' locations in great detail, they could determine when a driver had left certain zones, such as the state of Oregon. They also kept track of the time the driving was done, so a premium could be charged for rush-hour mileage.”

See my link to full article in comment section to Marc’s post.

The State of Hawaii is partnering with Better Place http://www.betterplace.com/hawaii and Hawaiian Electric Co, to become the first state in nation to have state-wide coverage of electric car charging stations by year 2012.

The largest in state photoelectric solar power farm 1.5 Megawatt (10 acres) will go on line Jan 9, 2009 capable of providing 30% of peak electric needs of the Island of Lanai. Additional wind farms will be added at a later date. Hawaii already has offshore wave electric generators operational and providing alternate electricity.

Governor Linda Lingle, Hawaiian Electric Co. and Maui Electric Co. signed historic partnership to build a new electrical grid with undersea cables tying Islands of Oahu, Lanai, Maui and Molokai together and developing alternate energy resources to reduce state-wide fossil fuel dependence 70% by year 2030 saving approximately $7 billion a year.

With the State of Hawaii endorsing use of electric cars, trucks and enlarging the public transit system for cleaner air and to lower carbon foot print means less fuel tax receipts. (Mayors infrastructure request to Washington, DC included $45,000,000.00 for 30 Hybrid 60' and 20 Hybrid 40' Buses and 30 Paratransit Vehicles for public transit system and $202,000,000.00 for phase 1 elevated high capacity light rail system creating direct total of 2964 jobs).

With less need for gasoline and diesel fuel Hawaii will have to develop a model tax system or work with State of Oregon mileage tax system to offset lost fuel tax revenues due to energy conservation.

It will be interesting to see the State save $7 billion a year and what methodology is used to maintain fuel tax revenues.

Posted by: Ken at January 4, 2009 1:39 AM


In Oregon, you have described a program that layers one consumption tax on another. The per gallon tax is already a rough mileage tax. This tax-by-E-Z Pass transponder at the gas pump is the same thing. Neither tells you where the vehicle has been. If the fact that a vehicle is being gassed is all that you obtain, then it would be easiest to just raise the per gallon tax and save the expense of the transponder and (almost inevitable) overhead that 'administering' the system will cost the taxpayers in general. Given that the Oregonians only approximately know location, they do not know actual miles driven or by which route. One of the most famous problems in mathematics is the traveling salesman problem - how to visit N cities while never re-traversing a route already taken. The problem becomes intractable for small values of N. This problem demonstrates how unlikely it is that you can obtain useful positional information from a system as limited as this pilot. The stated goal of knowing which roads were taken and at what time (for congestion surcharges) requires a far more sophisticated system. The Oregon system is pretty harmless, but I believe it is also a classic bait and switch to obtain approval for a far more expensive and intrusive system to accomplish the surveillance goals.

All my questions remain unanswered.

Posted by: chuckR at January 4, 2009 9:35 AM

Chuck asks...

Tell me why the government needs to know at that level of detail?
One possible answer is that certain "progressive" legislators, at least in Rhode Island, want to require that businesses report to the government the commuting practices of their employees, and in cases where the government decides that more commuting than is necessary is occurring, require employers to implement commute-reduction plans.

And then, if the whole program is ever put into play, they will of course say we need to raise the gas and mileage taxes because of reduced revenues from less driving.

(And remember this proposal comes from the wing of the left that wants you to believe that it's impossible to figure out who's in the country legally or not. But they do think it's possible -- and desirable -- to track the day-by-day movements of every worker who is in compliance with the law).

(And a final "and": Looking at the list of sponsors of the commuting bill, this item could also be filed under "reasons why RI Republicans aren't going to miss Bruce Long all that much").

Posted by: Andrew at January 4, 2009 10:28 AM

The current federal and state fuel tax is supposed to pay for transportation infrastructure, road; bridge repairs and updates.

With higher fuel prices, less driving and move towards greater fuel efficiency, energy conservation and alternate fuel usage, fuel tax revenues have fallen to unsustainable levels to support transportation infrastructure maintenance levels. The big three auto makers have not really gotten on the bandwagon for energy efficient high mileage cars and trucks, My current 07 car combined average between highway and city driving is 36 miles per gallon and at today’s prices I only use close to $60 a month in gasoline.

State of Hawaii is in a unique position where as we normally don’t try to drive our motor vehicles into California, Oregon or Washington State. All of our driving is limited to in state Hawaii driving. We have the high speed superferry which allows transportation between islands accommodating 800 passengers and up to 230 trucks and cars per trip.

State of Hawaii is becoming the national leader in alternate energy. Governor Linda Lingle (R) has mandated Hawaii reduce state-wide fossil fuel dependence 70% by year 2030 saving approximately $7 billion a year. Hawaii is the first state in nation to require solar hot water heaters on all newly constructed single family residences.

Governor Linda Lingle (R) and State of Hawaii, Hawaiian Electric Co. and Maui Electric Co. have embraced and setup a partnership with Better Place PLC to provide the first in nation state-wide deployment of electric car street-side charging stations and battery replacement stations by 2012. Maui Electric Co. is currently road testing electric trucks.

William Parks, a deputy assistant secretary at the U.S. Department of Energy, calls the idea "really, really groundbreaking." And the bean counters at Deutsche Bank call Better Place PLC plan "a paradigm shift" and say, "looking at Better Place PLC's model, we conclude that a pure Electric Vehicle should not be more expensive than a gasoline/diesel vehicle."

Average price of a electric 6 passenger car or utility truck is estimated to be $21,000.00 with Better Place PLC owning the quick-replaceable plug-in batteries so no charge to replace batteries at a changing station (about the time it takes to fill up a regular car gasoline tank). Electric car and truck mileage per full charge will be over 120 miles. Highest speed allowed in Hawaii is 60 mph on freeway. On the Big Island of Hawaii longest straight line drive in state is 100 miles shore-to-shore.

The concept is very simple so think of it like this: we pay mobile providers for minute-by-minute access to cell towers connected together in cellular networks. Truth is, we pay comparatively little - or next to nothing - for the phones themselves. After all, what you’re really buying is air time, not a box with buttons.

The same model works for transportation. Just replace the phone with an electric car, replace the cell towers with battery recharge stations, and replace the cellular networks with an electric recharge grid. Now you’re buying miles, not minutes:

1. Drivers pay to access a network of charging spots (up to100, 000 public stations) and conveniently located battery exchange stations powered by renewable energy.
2. Drivers pay for the miles they drive (pay as you go, weekly, monthly, yearly type plans).
3. Cars are made much more affordable - even free in some markets - by the business model’s financial and environmental incentives to add drivers into the network.
4. Better Place PLC operates the electric recharge grid that brings it all together

Since October 2007, Israel, Denmark, Australia, California (San Francisco, San Jose and Oakland) and State of Hawaii have committed to deploying the world’s first electric car networks.

If Hawaii is successful in converting at least 50% of current drivers to electric cars that would constitute an enormous loss of federal and state fuel taxes that support roads and bridges.

It would not be in the federal or states best interest to tax free renewable energy used to recharge the batteries.

Electric cars provide zero pollution exhaust emissions so the state would also loose out on emissions testing income. The only way left is to tax miles used to travel the federal interstate, state, city and county roads to provide needed income for infrastructure maintenance.

The big question is how federal and State of Hawaii will accomplish taxation that is transparent, fair to all drivers, car or truck owners of both fossil fuel and electric.

There are approximately 1.2 million cars in Hawaii with 70,000 to 120,000 of them being replaced each year.

Between riding public transportation and driving my car in Hawaii I log an average 5,000 miles a year on the car where when living in RI I logged approximately 17,000 miles a year in my car. The island of Oahu is 60% land mass of total RI land mass.

Posted by: Ken at January 4, 2009 6:33 PM

"And then, if the whole program is ever put into play, they will of course say we need to raise the gas and mileage taxes because of reduced revenues from less driving."

Honest to pete. Tell me again why we invented government and can we please just cancel the whole arrangement ...?

(Andrew, you raise a great point that needs to be brought up at the hearing of this borderline Orwellian bill.)

Posted by: Monique at January 4, 2009 9:40 PM

Ken - I congratulate you on your civic virtue. Hawaii, with its small size and high costs is an ideal laboratory to experiment on alternatives in transportation.

But, and its a large but, there is nothing you've discussed about HI or OR that suggests it is either necessary or desirable to surveil people's movements in the approximately 250 million private passenger vehicles in the US. And there is plenty I can think of to suggest it is unworkable at anything less than a huge overhead cost. And I'm an engineer with 35 years experience in hardware and software algorithms. I can think of a lot of practical problems over and above the danger of continuing to surrender our autonomy to the government. The people behind this must be either technically illiterate or have a financial interest.

Let's look at costs of the roads and bridges. (1) There is a 'base rate' component. Even if you walk everywhere, you are dependent on road transport for the necessities of life and should contribute some amount towards their creation and upkeep. (2) There is an 'environmental deterioration' component. Roads fall apart due to weathering. We are all on the hook for that. (3) There is a usage component. This recognizes that every time an axle goes over a road, it does some damage. Further, the amount of damage varies with the cube of the axle weight. A medium sedan one ton axle does 1/125th the damage of a truck five ton axle - and there are more of the latter per vehicle. We do subsidize heavy trucks, undoubtedly.

To date, the funding mechanism we have used when there is only one type of fuel has worked adequately. It will continue to work for the next several years or even decades while that quarter billion car fleet transitions to alternative fuels. The answer to insufficient funding is higher gas taxes, whether required by increased road maintenance costs or by more fuel efficient vehicles. Add in a reasonably tamper proof odometer to get the alternative fuel users to pay their share of the usage component. See, no need for a massive and probably unworkable Big Brother scheme to track your every movement. And as you know, in RI, government has broken faith with the taxpayers by running gas tax revenues through the general fund and diverting it for pet projects. If that's not the case, there should be no problem getting a law allocating all gas taxes directly to the DOT passed by acclamation. Don't hold your breath. More reason not to trust them.

Posted by: chuckR at January 4, 2009 10:09 PM


I enjoyed over 40 years as R&D electronic/electro-mechanical engineer, Computer Programmer/Analysis and Federal Information Systems Security Manager who helped develop and prototyped a current US and military-wide used information security system.

So I appreciate yours and Justin’s concerns about individual privacy.

Being now retired, I have not had the good fortune to have hands on or review full documentation on the 10 year State of Oregon mileage tax endeavor.

Because State of Hawaii will be a test bed for projected new tax developments related to alternate energy and transportation means based on future reductions of tax receipts, I am very interested especially because I now live here.

Currently the federal government and following states are interested in some form of mileage tax: Oregon, Idaho, Rhode Island, North Carolina, Ohio, Pennsylvania, Florida, Colorado and Minnesota. Hawaii will most likely join the group once electric cars enter the mainstream.

As I indicated federal and states have not progressed to a point where a cut in stone “tamper proof automated system” (yea right) has been identified for collecting vehicle mileage.

As you already indicated what’s wrong with the present odometer system? Nothing but somebody has to manually write down the numbers subject to misreading or transposing.

Woonsocket demanded under water cut-off threat to replace my water meter with a tamper proof radio transmitter type so the meter reader did not have to get out of the vehicle to manually shove the electronic reader into the outside terminal connector. I said NO! When I sold my house it was the only one on the street that required a manual reader. I won and was allowed to maintain the original water meter because no government agency has the right to demand placement of a “radio transmitter” no matter how small or large that could possibly cause health problems on private property without permission of the owner.

Posted by: Ken at January 5, 2009 1:04 AM
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