The Taxing Burden Of Mileage Fees

The pay-per-mile proposal could raise current taxes from 18.4¢ to as high as 46¢ per gallon according to a new study from the (GAO).

A little-known discussion is going on in Washington, D.C. regarding a new consumer tax. In the case of a pay-per-mile proposal that would replace current federal fuel taxes collected at the pump, the potential exists for a whopping gas tax boost of up to 250% for high-use vehicles. That raises current taxes from 18.4¢ to as high as 46¢ per gallon according to a new study from the Government Accountability Office (GAO). If implemented, Mileage Fees would significantly impact professional limousine drivers.

The GAO conducted the study because the nation’s Highway Trust Fund (HTF) revenues are way down and the fund is in danger of being bankrupt by 2014. The study asserts that federal funding for the Highway Trust Fund, which is used to build and maintain infrastructure, has dwindled in recent years due to improved vehicle fuel efficiency. The average driver currently pays about $96 a year in federal gas taxes. To raise the HTF yearly balance from the current $34 billion to the $78 billion needed to fix and maintain roads, those taxes could rise to $248 per year – a cost of 2.2¢ per mile compared to the 0.9¢ drivers now pay. Drivers of large commercial vehicles would pay even more.

One of the concerns about imposing the mileage-fee alternative to fuel taxes is the issue of privacy. In order to evaluate the road use of vehicles so that proper use-taxes can be assessed, the current process would be to have vehicles tracked through Global Positioning System (GPS) information. It does not sit very well with those who see this as a “Big Brother” solution in which the government knows where you are – and basically what you are doing – at any given moment. Plus, while no exact figures were given by the GAO, the costs to implement the program and collect fees from 230 million U.S. passenger vehicles is likely to greatly exceed the costs of collecting fuel taxes. These costs would most likely be passed on to consumers, adding more dollars to the increase in new pay-per-mile taxes.

The GAO study was based on a survey of 51 state departments of transportation, five domestic pilot programs already in use in the U.S., and existing programs in Germany, New Zealand and the Netherlands. Mileage-based user fees were found to be a more equitable and efficient use of roadways because each vehicle would be charged for its actual road use. And as our roadways crumble, Americans can expect to be paying a lot more money to use them in the years to come.

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