The Mileage Tax is Coming Soon

mileage taxThe mileage tax is inevitable. This tax is a fee charged to drivers for every mile driven on local roads and highways.

Currently, we pay taxes to the state and federal government for each gallon of fuel that we purchase.  The government collects billions of dollars each year from these taxes to fund the building and repair of the roads and highways that we all depend on each day. Due to the fact that a large percentage of the revenue for these projects is dependent on the amount of conventional fuel that we use, any reduction in fuel consumption will significantly reduce the tax revenue that the government collects.

The state and federal governments are enacting sustainability programs in order to reduce greenhouse gas emissions.  One such effort is the state of California’s pledge to eliminate conventional fuel vehicles by 2035.  Due to the fact that fewer and fewer vehicles will be using conventional fuel over the coming years, the government’s fuel tax revenue will drop considerably. Of course, a reduction in tax revenue from one source has to be replaced by revenue from another source. A similar issue impacted a large number of people who “got off of the grid” and installed solar panels.   After the local electrical utilities discovered that they were losing a lot of revenue from these customers, they found a way to collect fees to cover the maintenance costs of their infrastructure in the form of a surcharge for homes with solar energy.

It is already happening

The government has already started taking steps to implement a mileage tax.  President Biden’s 2021 infrastructure package allocates $125 million to fund mileage tax feasibility studies. The State of Oregon implemented a 1.9 cent tax for each mile driven on an Oregon highway.  The San Diego Association of Governments (SANDAG) has repeatedly proposed a 4 cent mileage tax for San Diego county drivers.

Technologies such as toll collection systems and vehicle telematics will be used to monitor the number of miles driven by our vehicles. In the not too distant future, most of us will no longer have to worry about pumping gas, but we will have to deal with a monthly mileage tax bill.

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