The Tax That Targets Hybrids—and Lets Hummers off the Hook

So you bought an electric car to save the planet—and save some cash by never paying gasoline taxes. In Oregon, you can do the first, but under a new program you’ll have to pay to use the state’s roads. Owners of gas guzzlers, ironically, get a tax break.

That could end up being good for the environment.

On July 1, Oregon launched a pilot program that replaces the gas tax drivers pay at the pump with a pay-per-mile fee system—the first program of its kind in the nation. Oregon transportation officials are billing the program, called OReGO, as a way to close the widening gap between declining gas tax revenues as drivers buy more fuel-efficient cars and the rising cost of infrastructure improvements and road upkeep.

Instead of paying Oregon’s 30-cents-per-gallon gas tax at the pump, a select 5,000 volunteer drivers will pay a 1.5-cent “road usage” fee for every mile that they drive.

“We’ve got to come up with something other than the gas tax because something has to be done,” said Michelle Godfrey, communications officer for the Oregon Department of Transportation.

Here’s how it works:

Each volunteer receives a device that records every mile the individual drives. Drivers are given credit for any gas tax they pay during the program.

Aside from the significant privacy concerns, the program is also catching flak for its environmental implications. Do some quick calculations, and you see that drivers of gas guzzlers get a tax break, while owners of fuel sippers and electric cars pay more.

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On its website, ODOT compares the gas tax an owner of a 2014 Toyota Prius, which gets 50 miles per gallon, would pay with what the owner of an 18-mpg 2014 Ford F-150 truck would pay. If each one drives the state average of 12,962 miles a year, the Prius driver would pay $77.77 in gas taxes, while the F-150 driver would pay $216.03. If they participated in OReGO, both vehicle owners would pay $194.43.

The price is even steeper for electric car owners. The driver of a battery-powered Tesla Model S pays no gas tax—meaning the individual puts zero dollars toward infrastructure projects, no matter how much he or she uses the roads. The driver of a 2005 Hummer, which gets about 10 miles per gallon, pays about $388.80 a year in state gas taxes. Under OReGO, they’d both pay $194.43.

The disparity has some concerned that the program could deter consumers from purchasing environmentally friendly and fuel-efficient cars.

“The mileage charge would be double the gas tax in a vehicle attaining 40 miles per gallon,” state Sen. Doug Whitsett, R–Klamath Falls, wrote in a blog post. “The tax further discriminates against families who live in rural areas. Their location and lifestyle requires them to travel much greater distances than their urban counterparts.”

But that’s not a problem that ODOT officials are seeing yet. Godfrey said more drivers of high-mileage vehicles have signed up for the program since its launch than have those of low-mileage ones.

“What we’re seeing is people saying, ‘Yes, this is the right thing to do,’ to pay a fair share,” Godfrey said. “People are going to continue to use less and less gas—that’s not changing. That means we’ll see less and less funding—there’s a real crisis emerging here.”

It’s a nationwide problem, and many other states are watching Oregon. California is expected to start a similar program by 2017, and Washington state isn’t far behind.

At its core, the problem with the gas tax is threefold.

First, more fuel-efficient cars on the road—including hybrids, plug-ins, and electric cars—equals fewer trips to the pump. That leaves owners of gas guzzlers to pay a larger share of the infrastructure costs.

Second, Oregon’s gas tax hasn’t increased since 1993, and the federal gas tax that feeds the nearly bankrupt Highway Trust Fund has been stuck at around 18 cents for 22 years.

Last, the cost of building materials, road construction equipment, and project work has increased faster than inflation has. All of this is a recipe for fewer projects and, eventually, unsafe roads.

“We’re trying to pay for 2015 infrastructure with 1993 dollars,” Congressman Earl Blumenauer, D-Ore., who signed up his Prius for OReGo, said in a video post. “[The gas tax is] no longer the effective user fee it once was.”

So, Why Should You Care? Godfrey sees the gas tax as a crutch for the fossil- fuel industry—leaving road and infrastructure improvements dependent on the increasing consumption of gasoline that is fueling climate change and harming human health.

“The environmentally conscious decision that drives you to purchase a fuel-efficient car—shouldn’t we be making those same conscious decisions when it comes to our roads, and decoupling our funding from the consumption of fossil fuels?” she asked. “If we truly want to be environmentally conscious, we’ve got to find an infrastructure funding model that doesn’t rely on gasoline sales.”