OR officials want to tax fuel-efficient cars

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by Shelby Sebens, Northwest Watchdog

PORTLAND — While the federal government hands out tax credits for high-mileage cars, the state of Oregon may ask owners of hybrids and electric vehicles to pay more.

When the legislature convenes in February, lawmakers will consider taxing eco-friendly vehicles, ones that get 55 miles per gallon or more, based on how much you drive.

Their logic: electric and other fuel-efficient cars aren’t paying the state tax on gasoline (which you pay when you pump) and therefore aren’t contributing to road construction and repair.

“They’re getting a free ride,” said state Rep. Vicki Berger, R-Salem. She said the state’s road fund cannot keep up by relying on the gas tax, which is 30 cents per gallon. The irony is rich, though, especially in a place like Oregon where the official state color may as well be green.

Saving money at the pump could cost drivers down the road. Lawmakers want to tax fuel-efficient drivers.

“What’s really happening: It’s two different, competing government priorities,” said Gloria BergquistAlliance of Automobile Manufacturers vice president. On the one hand, you have energy security and environmental officials who want to incentivize the oft-pricier electric and hybrid vehicles. On the other hand, you have officials hit with the costs of fixing roads.

Bergquist said the auto organization opposes a per-mile vehicles tax, especially on fuel-efficient cars, which aren’t selling as well as they’d hoped.

Hybrids, which went on sale in 2000, still make up only 2.5 percent of all auto sales in the United States, she said.

“For many people, you’re taking away the incentive for them to buy this vehicle,” she said of the per-mile tax. “Generally a tax scares people.”

But taxing the greener cars is just the first step toward changing the revenue stream for roads, Berger says.

“It certainly is an arrow to the future because those of us who look into the future see you just can’t keep raising gas taxes,” Berger said. “That just won’t pay the bills for our highways.”

But don’t get too excited. That doesn’t mean bye-bye gas tax.

“At some point you’re going to have to have a duel system,” Berger added.

John Charles, president and CEO of the Cascade Policy Institute, argues Oregon doesn’t have a gas tax revenue problem, but rather a spending problem.

“In the big scheme of things though, this topic is a sideshow,” he said in an email. “The governor’s proposal to raise taxes by $450 million to pay for our share of theColumbia River Crossing boondoggle is one of the biggest policy issues of the entire 2013 session. Until the state stops wasting money on absurd projects such as CRC, light rail, and so-called ‘high-speed rail,’ there is no point worrying about getting more money from motorists.”

Charles, who served on the state’s Road User Task Force from 2001 to 2010, also said it makes more sense to impose a fee for studded tires. “There is no doubt that studs are one of the two leading causes of road wear (along with heavy truck axle-weights, which are heavily taxed already),” he said.

Jody Wiser, policy advocate for Tax Fairness Oregon, agrees with that notion, but thinks the tax per-mile on high-efficiency vehicles makes sense.

“Clearly, if we’re going to use roads, we have to have them be serviceable,” she said. “As we increase fuel efficiency we decrease the amount of money for highways and roads and it makes perfect sense to me.”

The details of the legislation are still being worked out, including how much the tax would be and how the government would track mileage.

“It’s pretty obvious there’s going to be an app for that,” Berger said. Many are opposed to any kind of GPS tracking system that would mean big brother is looking over your shoulder.

Wiser argues the grace time for incentivizing drivers to buy fuel-efficient vehicles is up.

“The agenda is well pushed in states like Oregon and California,” she said. “It’s time for everybody to pay their share.”

The auto industry, which has invested billions in fuel-efficient technology, disagrees.

“We want to do everything we can to encourage consumers to buy these vehicles,” Bergquist said.

Northwest Watchdog is a project of the Franklin Center for Government & Public Integrity