By Justin Hyde, October 17, 2014
It won't happen immediately, or even within the next year, but not too far into the future you might pay a tax for every mile you drive — thanks to California.
Three weeks ago, California Gov. Jerry Brown signed into law the first test of mileage-based road taxes in the Golden State. The bill, which passed the state legislature with the backing of transit agencies, environmental groups and most major automakers, creates a 15-person panel to oversee a pilot of pay-by-the-mile taxation by 2018.
The move makes California the largest state to explore how modern technology might replace the dwindling money from gasoline taxes used to build and maintain roads, thanks to ever-more efficient vehicles and less driving overall. Congress has been forced to fill the gap at the federal level with billions of dollars in temporary funding; in California, where residents pay 48.5 cents on the gallon in state gasoline taxes worth more than $3 billion a year, the state has borrowed from those revenues in recent years to cover shortfalls elsewhere.
Of the other states which have explored such systems, Oregon stands as the most advanced, with its plan to offer a voluntary pay-as-you-drive tax setup next year offering 5,000 drivers the chance to pay 1.5 cents for every mile they travel in the state. The Oregon system uses a pair of devices — one in vehicles, and one in special fuel pumps — that used GPS to track miles driven, then gave the appropriate credit or surcharge at the pump itself. (Oregon also found that drivers in a test program paid 28 percent more than they would have using fuel taxes alone.)
But the backers of Oregon's mileage tax system say the technology could be far less complicated, and adoption far quicker, thanks to services like Apple's iPay and in-car Internet setups, such as General Motors OnStar. State Farm already has a pay-as-you-drive discount for its customers with newer Ford vehicles that use Ford's Sync to automatically keep track of how far they've traveled. As the Oregon officials imagine it:
One envisions a time when all new cars will come equipped with mileage reporting capability. New car buyers will decide during the registration process whether to activate the mileage reporting capability already installed into the car or add an external reporting device. They will also choose a provider for account management or default to government managed account. Motorists will then drive and periodically receive a bill by mail or email—their choice—that may be bundled with other value added services... Motorists may check the bill details and pay online or by mail or authorize automatic payment from their smartphone, tablet device or the connected vehicle console in the dashboard of their car. Giving motorists the ability to choose their mileage reporting and bill payment preferences will make mileage reporting and per-mile charge payment simple and comfortable— as each motorist defines it.
Movements may be a more personal form of data than even name and address; where you live is a public record, but tracking someone's daily routine can reveal far more private information. Yet there are already many ways businesses can do so; every iPhone running the latest iOS 8 update has the ability to send location data to advertisers or remember a user's frequent locations, and license-plate scanning firms already have a billion plates on record.
Chances are, given the technology on hand and the money at stake, California will devise a system similar to Oregon's that can satisfy some privacy complaints (perhaps by tracking odometers only) but is also easily adoptable by motorists. With 17 percent of all U.S. new-car sales in the Golden State, and a need for road repair mimicked in most other states, it's entirely likely that when it comes to taxing by the mile the old saw is true: As goes California, so goes the nation.