Drivers may have to prepare themselves for a driving tax in the near future as gas prices continue to rise and the government struggles with how to profit from it, according to a recent CNN Money article. The concept is being kicked around by Federal lawmakers as they think of ways to make up for the income they’re not receiving from the current gas tax.
A Driving Tax Could Provide the Income the Gas Tax Isn’t
Many people don’t know that included in their gas prices is an 18.4 cent a gallon gas tax. The current gas tax has held its rate since 1993 and is collected at the pump.
However, because most cars now operate with greater fuel economy and people are going to the pumps less often, the government is collecting roughly $35 billion a year, which it says is not enough to fund projects like building and maintaining highways.
In order to earn money that hasn’t been brought in at the pump, lawmakers are considering either switching to or adding a driving tax, officially known as a “vehicle miles traveled” tax.
The tax would charge people for the miles they’ve driven rather than charge for the amount of gas they’ve purchased, which could mean significant changes in the cost of operating a vehicle.
Tax Could Bring On Privacy and Cost Issues
The reason why a driving tax is still in the idea phase, with no actual legislation introduced, is because of the many downsides drivers are likely to see with the concept.
For one, privacy would be a major issue since instead of paying at the pump, drivers would pay the driving tax by mail following an electronic reading of a vehicle’s odometer at the gas station. Another idea considered is to have drivers tabulate miles by using an on-board GPS system that records miles driven. In this case, motorists could also be charged based on which roads they travel as well as the time of day.
Another potential problem with he driving tax is it would likely be more costly. CNN Money estimates that the cost of a driving tax could be two or three cents a mile as opposed to under a penny for the gas tax. And since lawmakers have also introduced idea of adding the driving tax while keeping the gas tax, drivers could be looking at some hefty costs to bear.
The news of this driving tax consideration comes only hours after media outlets reported the U.S. oil and gas industry survived an effort to repeal $21 billion in tax breaks over 10 years. Associated Press also reported that state gas tax breaks for drivers could fall away as gas prices continue to increase.
With all of the changes going on in relation to gas, it’s hard to say what types of increases we could see in the near future. It’s for this reason that drivers may want to learn how to save money on gas sooner than later.
