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Oregon To Pioneer New Tech Alternative To Paying Gas Tax

Oregon will soon launch a first-of-its-kind pilot program that allows drivers to pay taxes on the number of miles they drive rather than the amount of gas that they consume.

Starting July 1, up to 5,000 Oregon drivers will be able to obtain a device that tracks the number of miles they drive, allowing them to pay a tax of 1.5 cents per mile rather than 30 cents per gallon, The Associated Press reports.

The “OreGo” program will be used to gauge public support for a hypothetical statewide transition to a per-mile tax, which is seen as a way of stabilizing revenues in an era of rapidly increasing fuel efficiency. (RELATED: Highway Trust Fund Almost Broke, Senators Propose Gas Tax)

OreGo will be open to all vehicle types, but to ensure it is not inundated by gas-guzzlers, vehicles that get less than 17 miles per gallon will be capped at 1,500, as will vehicles that get between 17 and 22 miles per gallon.

All 50 states and the federal government currently rely on the gas tax to fund road maintenance and construction projects. In recent years, however, gas tax revenues have dropped significantly due to improvements in fuel efficiency and the growing prevalence of electric cars.

Congress has toyed with a number of alternative funding mechanisms, including new tolls on Interstate highways and a repatriation tax holiday for corporate profits earned overseas, but seems likely to defer on making such a difficult decision in favor of temporarily replenishing the Highway Trust Fund from general revenues when it runs out at the end of the month. (RELATED: Obama Proposal Would Almost Double Federal Highway Spending)

At the state level, legislators have fewer options, and many have pegged their hopes on pay-per-mile schemes similar to the program Oregon is preparing to test. According to Automotive News, per-mile road taxes are being considered in various forms by more than 10 states, including California, Florida, Indiana, and Washington.

Those states will likely keep a close eye on the OreGo program, particularly its handling of difficulties related to tax collection and privacy concerns that will likely come into play when other states implement their own trials.

Because only a small number of drivers will be able to participate, for instance, there is no practical way to exempt them from existing gas taxes at the pump. Instead, the state will use mileage and fuel-consumption data to compare the amount a participant owes on a per-mile basis to the amount they paid in fuel taxes, then send them either a refund or a bill for the difference at the end of each month. (RELATED: Poll: Voters Resoundingly Reject Gas Tax Increase)

Oregon has also had to adapt to concerns voiced by the American Civil Liberties Union, which objected to GPS trackers the state intended to include in the odometer devices to ensure that drivers would only be billed for miles driven within the state.

In response to the ACLU’s protests, Oregon has made GPS tracking optional, and promised to destroy all location and mileage records after 30 days for drivers who do elect to use it.

The OreGo program follows a pioneering tradition in the state. Oregon introduced the nation’s first-ever gas tax in 1919, and nearly a century later, it is now poised to become the first to adopt an alternative to that tax.

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