Discussion of a tax on miles driven is continuing in the US, often as an alternative to a politically unviable higher petrol/gasoline tax. But a miles-driven tax, as is frequently pointed out, might not effectively reduce fuel consumption, because it would not reward fuel efficient cars.
What is a a fuel tax, or a miles-driven tax, for? If demand reduction is the only goal, law professors Michael Levine of New York University and Mark Roe of Harvard say it could be done by giving the money back to drivers in the form of rebates. That way, average drivers would have an incentive to reduce their use. They write in the FT today:
Here is how it would work: Suppose you are the average driver, driving 12,000 miles a year in a 15 miles-per-gallon car. A $2 per gallon tax would cost you $1,600 a year. You would be unhappy about that. Sure, you would drive less if taxed and next time you would buy a car with better petrol mileage. But you would be so annoyed at the tax that you would not forgive your congressman for voting for it. But if you got a $1,600 cheque or a visible rebate on your taxes, you would understand that you were even: you might even think that with a little life adjustment, you could beat the game and come out ahead.
Your rebate would not change if you used less petrol. So you would have an incentive to keep some of that $1,600 by driving a little less often in a more fuel-efficient car. The country would import that much less oil, produce less carbon dioxide and get that much more freedom to manoeuvre in the international arena.
Heavy drivers, such as truckers and taxi drivers, would get bigger rebates. The auto industry would see new opportunities from demand for smaller, cheaper cars. This, they say, would persuade three of the four groups most opposed to such a tax: consumers, politicians, and the auto industry. The energy industry would just have to be outnumbered for it to work.
Fuel tax could be replaced with by-the-mile road tax (McClatchy, 01/07/09)
Rises in petrol tax ‘not feasible’ (FT, 28/05/09)