Oregon's Gas Tax Experiment

Posted by Andrew Price

In Oregon, declining gas tax revenues are prompting the state to look into some wacky new ways of getting money from drivers. The LA Times reports:"For years, Oregon has been diligent about reducing the state's dependence on fossil fuels, but its environmental consciousness has come at a stunning price-gas tax revenue is down $4.8 million a year compared with 2006."In response, the state is exploring (and Governor Theodore Kulongoski has just endorsed), a new tax that would charge drivers by how many miles they drive, rather than how much gas they consume."A state task force will look at equipping every new vehicle in Oregon with a Global Positioning System to record every mile driven and where. Motorists would pay at the gas pump based on how much they drove, no matter how fuel-frugal their vehicle."Roads and highways need upkeep, of course, but I'm not sure this is the way to make up for the budget shortfall. By shifting to a tax based on number of miles driven, the state would weaken the incentives that are now pushing people-with apparent success-to drive fuel efficient cars. That seems like an obvious step backwards.But gas is already cheap in Oregon. Right now, it's below $2 per gallon in Eugene. Given the state's population of 4.7 million and a conservative estimate of 400 gallons annual per capita consumption, you could make up that $4.8 million with a gas tax increase of $.01. A much more sizable increase in the gas tax would bring in more revenue, further reduce carbon emissions, and help get the price of gas nearer its real cost.