There’s a wide-spread perception in the U.S. that the government is incapable of doing anything well. People with this viewpoint believe that individuals, communities, or the private sector can accomplish more if they don’t have to deal with government interference.
Well, that’s simply not true. In fact, the government is, without question, absolutely the best at one specific task: creating new ways to take your money.
With this in mind, it should come as no surprise that some people in Washington are kicking around the idea of a new kind of tax on motorists. Since today’s vehicles are becoming more fuel-efficient, the federal government’s 18.4 cent-per-gallon gasoline tax isn’t bringing in as much revenue as it once was. As a result, our lawmakers claim, funds for highway improvements are dwindling. So an “innovative” idea is being floated in our nation’s capital: the creation of a driving tax.
The concept is relatively simple: motorists would be taxed on the number of miles they drive, rather than the amount of gas they purchase. Though details are vague, proponents claim that mileage could be recorded either through automated readers at gas pumps or by GPS-type devices implanted in vehicles. Regulators could even vary driving tax rates based on size, type, or make and model of vehicle.
You may think that a driving tax sounds good in theory. After all, if you taxed an average driver of a Toyota Camry just under a penny per mile, it would come out to the equivalent of paying about $3.40 a gallon for gas – which is less than today’s prices in most areas.
However, the problems arise when you start considering the actual implementation of such a scheme. Here are some of the potential pitfalls of a driving tax.
- Collection. Today, drivers automatically pay the gasoline tax when they fill up their tank. With a per-mile tax, drivers would have to send a payment to the Treasury. Then, the government would have to handle the people who choose not to pay. Given the thousands of individuals who don’t pay traditional income tax in this country, it’s hard to believe that the government could succeed in tracking down scofflaws and collecting what’s owed.
- Rigidity. With the current system, gasoline prices increase and decrease along with the market. A driving tax would not. So even in a cheap gas market, drivers would still be forking over the same amount of money each month or year.
- Tax rate creep. Backers of the driving tax might argue that motorists won’t pay any more money than they do now because the driving tax will simply replace the gasoline tax. Really? After all, there’s no guarantee that Washington would abolish the gas tax when they implement the driving tax. Also, lawmakers could decide to raise the driving tax rate to cover revenue shortfalls in other areas whenever they wanted.
- Recording. Any driving tax would need to be accompanied by major infrastructure upgrades — either at gas stations or in individual vehicles. Who do you think will have to ultimately pay for that?
- Geography. Gas-saving concepts like carpooling and mass transit are fine for cities, but they’re simply not practical in many rural areas. So a driving tax could disproportionately affect rural Americans who have no choice but to drive from one place to another.
- Corruption. If a driving tax system were to differentiate by vehicle type, there’s no guarantee that the rates wouldn’t be influenced by corporate interests and their lobbyists. For instance, would the tax rate be lower for U.S.-made vehicles? Our federal income tax system is so complex precisely because of this agenda-driven piecemeal approach. It’s silly to think a driving tax would evolve any differently.
It’s been said that “necessity is the mother of invention.” With government, the proper saying is more like “fiscal irresponsibility is the mother of creative taxation.” While it’s hard to argue with its creativity, the idea of a driving tax would definitely face tremendous opposition from motorists. So don’t expect it to happen any time soon.
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