So much for the gas tax savings among drivers of hybrids, electric cars or other fuel-efficient vehicles…
After years of cost savings for fuel-efficient car buyers, the government wants the gasoline-tax revenue that was lost at the pump because the fuel-efficient cars don't have to fill up as much as other vehicles.
That's why the Obama administration is floating the idea of taxing you per miles driven, or as preliminary legislation puts it, "vehicles miles traveled" (VMT).
Yes, you read that right: A new tax on every mile you drive.
The VMT tax could replace the 18.4 cent federal gasoline tax, which hasn't been raised since 1993.
That means those who drive fuel-efficient cars – some of which, like the Chevy Volt and the Toyota Prius, were subsidized by the government – would pay the same vehicle-related taxes as other drivers.
I think George Harrison said it in the Beatles' "Tax Man": "If you drive a car, I'll tax the street… I'm the tax man…"
The VMT Tax: Taxing the Street
The new VMT tax would bring in more revenue for road and bridge infrastructure. The federal Highway Trust Fund, which pays for road and bridge construction and repair, is expected to run out of money by 2015, Michael Green, a spokesman for AAA, told Money Morning.
As the feds consider the VMT, a handful of states could implement similar revenue-raising fees.
Oregon is considering a pay-per-mile tax, while Texas, Massachusetts, New Jersey and Arizona are also weighing specific taxes or fees for "green" cars. Virginia just imposed a $64-a-year fee on hybrid and electric car owners, while Washington State added a $100 registration fee for electric cars in February.
Monday Morning Chief Investment Strategist Keith Fitz-Gerald, who drives a fuel-efficient turbo diesel and a Prius, predicted in January the idea of taxes targeting fuel-efficient cars would spread beyond his home state of Oregon.
Speaking of state transportation officials there, Fitz-Gerald said at the time on FOX Business' "Varney & Co.": "I think they want their pound of flesh no matter which way they're going to get it to compensate for decades' of bad fiscal policy. And stay tuned: It's coming to your neighborhood soon."
Punishment for Driving Fuel-Efficient Cars?
This week, Fitz-Gerald took aim at the preliminary Obama administration bill's VMT tax.
"We've tried for years to incentivize people to drive fuel-efficient cars," he said. "So now .. they're going to get punished for doing so."
So why bother buying amore expensive, energy-efficient car instead of the gas guzzler if you're going to be hit with the VMT tax either way? Why not just buy the cheaper V-8 and dismiss what you've been told about your duty to help save the ozone layer and reduce our dependence on foreign oil?
Back in January, Fitz-Gerald wrote of the Oregon proposal, "Boneheaded moves like this one are going to put yet another roadblock to more fuel-efficient motoring and create a distinct disincentive to buy fuel-efficient cars. Last time I checked, energy independence was a national issue that played heavily in the most recent election cycle just as it has for years."
Other opponents of the proposed Oregon tax agree.
"What's the message they're sending? With one hand, they're offering a tax rebate to get you to buy an electric car. With the other, they're proposing a new tax," John Christian, chairman of the Oregon Electric Vehicle Association, told The Oregonian. "It looks like money-grubbing."
Then there's the matter of just how the government would track miles so it could charge you for driving them.
Among the possible ways being mentioned by the Congressional Budget Office in a report supporting a VMT tax: tracking devices that would enable the government to determine how far – and where – you drive. So much for privacy rights.
And under the Oregon proposal, drivers could be traced through GPS mileage-reporting devices or through smartphone technology, Fitz-Gerald says.
Looks like you might end up with Big Brother as a permanent passenger.
Read more from Fitz-Gerald on the gas tax here: Now the Government Wants to Track and Tax Your Mileage
- Money Morning:
Fuel-Efficient Car Owners: Beware this Proposed Tax (Video)
- USA Today:
Hybrid drivers may save on gas but new tax gotcha
- The Star-Ledger:
Plan to tax electric vehicles shows shocking lack of sense
- The Associated Press:
Oregon officials propose per-mile tax for gas-sippers