States Consider “By The Mile” Taxes

( – While overall taxes in some states are causing residents to flee elsewhere, tax revenue collected from gasoline purchases has been decreasing. Electric vehicles, increased fuel efficiency in gas-operated cars, and rising inflation are behind the new trend.

States are looking for ways to remedy this and one solution would see drivers charged a “by the mile” tax in place of what they pay per gallon at the pump. A tax on the electricity provided by public charging stations for electric vehicles has also been floated, as has taxing package deliveries. A number of states are already implementing additional up-front taxes and registration fees on electric vehicles.

A pilot program that began in 2015 in Oregon required drivers to install a device in their vehicles that would monitor the distance they drove. Mileage data was collected after plugging the device in and relayed to the state transportation department. It was the first program of its kind in the nation.

Utah and Virginia have implemented similar programs and Hawaii will soon follow suit. President Biden’s 2021 infrastructure measure will fund a related federal pilot with $125 million. In 2022, Colorado enacted a 27-cent tax on home deliveries from a number of retailers.

In 2008, car rental providers began charging customers for carbon offsets. These were marketed as being “offered” to customers as a way to negate the impact their gasoline emissions would have on the environment. The offsets were a required charge.

The transportation program director for the National Conference of State Legislatures, Doug Shinkle, says the pilot programs in place “will soon need” to be made mandatory. Shinkle said that rather than being a source of tax revenue, the pilot programs were about “getting the public comfortable with it.”

According to the U.S. Bureau of Labor and Statistics, electric car sales accounted for only 0.1% of total car sales in 2011. By 2021 the number climbed to 4.6%.

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