Forget the Gas Tax! Is ‘Driving Tax’ Coming?

May 22, 2011 in Tax Hike

Forget the Gas Tax! Is ‘Driving Tax’ Coming?

Washington ready to squeeze American drivers?

NEW YORK (CNNMoney) — Washington lawmakers are kicking around a new idea to help raise funds to fix our highways and infrastructure: a national driving tax charging motorists by the mile.

A driving tax could either replace the current 18.4 cent a gallon federal gas tax or, possibly, add to it.

Because greater fuel economy is letting motorists drive more miles using less gas, the current gas tax that funds the federal government’s efforts to build and maintain highways isn’t generating enough money.

A driving tax, officially known as a “vehicle miles traveled” tax, could close that gap.

While many see a driving tax as more efficient than the gas tax, there are privacy concerns over how driving information would be collected. Plus, lawmakers opposed to the idea say it places a heavier burden on motorists from rural states.

“It’s a true user tax,” said Ken Orski, publisher of the infrastructure industry publication Innovation NewsBriefs and a former transportation official in the Nixon and Ford administrations. “But there are serious political problems with this proposal.”

Although there’s currently no bill proposing such a tax, lawmakers are looking into it.

Earlier this year, North Dakota Democrat and Senate Budget Committee Chairman Kent Conrad asked the Congressional Budget Office to study the idea. In March CBO issued a report that said such a tax was feasible and had many advantages over a gas tax.

“Because highway costs are more directly determined by miles driven than by fuel used, appropriately designed [mileage] taxes can do more to improve the efficiency of road use than fuel taxes can,” the report said.

The CBO report came on the heels of two congressional commissions that recommended implementing such a tax, said Orski.