How About a Vehicle Mileage Tax?

To deal with population growth, traffic density, and global warming.

From Slate Magazine.

Looking for a way to raise money for roads and public transit, San Francisco Bay Area transportation officials have decided to look into a novel idea: Taxing drivers for every mile they drive. The hypothetical tax—which at this point is only being studied as part of a long-range plan—could run from as little as a penny to as much as a dime per mile, perhaps depending on the time of day, according to the Associated Press.

The VMT (vehicle miles traveled) tax, the thinking goes, would not only bring in new revenue but encourage people to drive less. The San Jose Mercury News reports that small pilot tests of a VMT tax in cities in Oregon and Washington have shown “encouraging” results, with drivers reducing their total mileage to save money.

Sure, but how does the government propose to keep track of the number of miles that every driver drives? Under the idea being studied by the San Francisco-area Metropolitan Transportation Commission, the Mercury News’ Mike Rosenberg explains, “Drivers would likely have to install GPS-like trackers on their cars to tally travel in the nine-county Bay Area, from freeways to neighborhood streets, with only low-income people exempted.”

Oh but don’t worry, the government would never dream of using these tracking devices for anything except tallying the total number of miles you drive. “The last thing we’re interested in is where you go and what you do,” a commission spokesman told the AP.

Here’s how a free-market, true believer, business friend of mine responded to the idea in an email:

Now there is a great plan – lets get people to drive less so more businesses can fail.  Oh, if more businesses fail that mean less tax collections, and therefore leads to higher unemployment.  But wait, we can raise taxes on the successful companies and the people who buy from them can be taxed higher also….I am sure the idiot who proposed this plan, failed Econ 101.  Government can not collect more from a soft economy without slowing it down further.

That same friend often tells me I don’t know shit about business, but even as clueless as I am, I can’t help but wonder why the correlation between miles driven and economic growth is so obvious in his thinking. The pilot studies show people actually save money as a result of driving less. And can’t we presume they spend most of their savings? Albeit at places like And would the miles driven/economic growth correlation, whatever it might be right now, weaken if urban planners designed more walkable and bicycling friendly neighborhoods, if people began carpooling, or taking public transportation, and/or cycling, and if people purchased even more of what the need and want on-line?


11 thoughts on “How About a Vehicle Mileage Tax?

  1. Your friend is sadly unaware of how taxes really have little to do with job creation. Taxes are as low as they have been in about 50 years and profits are as high as they have been in some time, yet job creation doesn’t seem to be happening, except in cheaper foreign labor markets and part time jobs that have no benefits. There’s a reason the income gap is getting wider in this country and it has nothing to do with taxing the “poor” rich.

  2. Germany has very high taxes across the board and the motor of their economy is small business. Go figure. Very high energy taxes to boot. Universal health care… Public transit…bike lanes…..

    • Indeed – and Germany’s economy is outperforming the US these days. Of course, other especially strong economies can be found in Scandinavia. Perhaps the idea that taxes and social welfare programs harm business and economic growth has already been falsified in the real world!

      • Thanks for the replies Dean and Scott. My friend is symbolic of many on the right who have very limited or no personal experience in Europe. And for whom individualism is paramount and low taxes are part and parcel of individual liberty. “It’s our money, not the governments.” I should note he’s not mean-spirited. He has some compassion, he just thinks churches, families, and other private groups should provide whatever charity is needed because they’re more efficient and are less likely to create dependency. His political values are the opposite of yours, mine, Europe’s and Scandinavia’s. We think E is worth emulating in many ways. In contrast, most on the right think we should look carefully at Europe’s social/economic/and cultural policies and then do the opposite. How to bridge the divide in perception? Maybe defer to the UN Development Program’s ranking of quality of life which shows what you and I know, that life is pretty darn good for many Europeans and Scandinavians. But my friend and the right more generally wouldn’t put any credence in the UN’s work and would reject most of their methods. There’s also a religious layer to their anti-European thinking. The US is special because it was founded as a “Christian” nation. Europe may be the most secular region in the world. Very high taxes, Godless, and women go topless in German parks. Well, on second thought, my friend might not quibble with that last point.

  3. Not sure if buying online actually saves gas. The items purchased most likely travel long distance, in an airplane or semi, both of which use huge amounts of fuel. The items are of course only one of many in the same plane or truck, however, bust I would imagine the amount of fuel for those many items bought online is more than the amount used if all those consumers had ridden their bike, walked or driven a high efficiency fuel car to their local store.

  4. In addition, although I’m in favor of anything that gets drivers to be more conscientious about the number of miles they drive, this mileage tax feels like too much of a reach of the hand of government. I think a high per gallon cost for gas would better as then people would be making the choice more on their own and it’s a lot easier to manage than a complex program.

  5. I agree with the gas tax idea. It is also a much better idea than fuel efficiency standards set by the government, as that just causes automobile companies to build cars at a loss that people don’t buy. Impose a tax to bring gas up to say $6 per gallon, and then decrease the tax as the price naturally rises to keep gas at a relatively cheap price. Gasoline is actually, with inflation taken into account, cheaper than it was in the 1970’s

    • I’m in favor of higher cafe standards. It’s ridiculous that 90% of cars don’t get much better mileage than two/three decades ago. I think they can build lighter cars with less horsepower that will be equally safe and far more efficient. And make money. If innovators were sure that gas was going to remain relatively high for the forseable future, as a result of a higher federal gas tax, they would commit more seriously to innovations/alternatives.

      • The problem with cafe standards is that it results in crap cars that are just built to fill a quota and nobody buys. The best way to get the companies to increase fuel efficiency that would make a difference is to (somewhat drastically) raise the price of gas. There were plenty of 30+ miles per gallon cars when gas was under 3 dollars, but everyone in America was buying SUV’s. With gas at $8 per gallon as in Europe, you don’t need cafe standards.

  6. The meme that any tax = businesses failing and fewer jobs is getting a bit absurd. That said I’m not sure about a mileage tax as the best means — it seems a bit complex and intrusive.

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