California Moves One Step Closer To "Mileage Tax"; Could Require Tracking Your Cell Phone Movements

Just a few months after implementing a massive 60% hike in gasoline taxes, raising them from $0.297 per gallon to $0.417, the state of California is now one step closer to implementing a brand new tax that would charge drivers for each mile driven. 

As a quick example of how shockingly misguided such a piece of legislation would be, the logical conclusion here is that poor people who have been forced out of cities like San Francisco, Los Angeles and San Diego due to rising rents would now be forced to incur yet another massive tax for simply commuting into city centers to do their jobs...in essence, in many cases, it would serve as a regressive tax on the poorest families...

So how did we get here?  It all started back in 2014 when California passed Senate Bill 1077 calling for a mileage tax.  The bill kicked off the California Road Charge Pilot Program which sought to design and test various strategies for implementing a mileage tax.

Now, after 3 full years of studying various methodologies for tracking mileage, from requiring a "plug-in" for each vehicle to tracking your smart phone movements to more manual systems that would track odometers, the California State Transportation Agency (CalSTA), according to a newly filed report is officially ready to declare a mileage tax "feasible".  Here"s what they found:

The Road Charge Pilot Program successfully tested the functionality, complexity, and feasibility of the critical elements of this new potential revenue system - road charge - for transportation funding.

 

• Manual options provide the highest degree of privacy and data security, but will in all likelihood be the most difficult to enforce, and could be costly to administer

 

• Plug-in devices are the most reliable options, however as new technology emerges this methodology could be obsolete by the time a road charge program is adopted

 

• More technologically advanced methods, such as the smartphone application with location services and the in-vehicle telematics show great promise, but need further refinement

Of course, as State Senator Scott Wiener points out, a mileage tax will be a huge blow to all the folks that have been coaxed into electric vehicles over the years by tax subsidies which made them more affordable.  While those folks have been able to avoid gasoline taxes, part of the calculus that supposedly makes them "affordable", they won"t be able to avoid a mileage tax.  Per CBS:

But it’s not just a question about money, it’s also a question about fairness.

 

State Senator Scott Wiener and others are saying that when it comes to road taxes, it’s time to start looking at charging you by the mile rather than by the gallon.

 

“If you own an older vehicle that is fueled by gas, you’re paying gas tax to maintain the roads. Someone who has an electric vehicle or a dramatically more fuel efficient vehicle is paying much less than you are. But they are still using the roads,” Wiener said.

 

“People are going to use less and less gas in the long run,” according to Wiener.

 

And less gas means less gas tax, and less money for road repair.

 

“We want to make sure that all cars are paying to maintain the roads,” Wiener said.

Yet another reason for California residents to promptly consider a move to Texas...

Here's Why You'll Pay Higher Gas Prices Whatever The Market

Authored by Irina Slav via OilPrice.com,

The average gasoline tax in the U.S. is 49.5 cents per gallon, according to data from the American Petroleum Institute. That’s not too bad as far as averages go, but it has been climbing over the last five years and it will continue rising as states lose hope that the federal government will chip in for infrastructure construction and maintenance, and transportation.

Washington has been wary of raising the federal fuel tax. So wary, in fact, that the last time it adjusted the rate was more than two decades ago. Meanwhile, international oil prices have been jumping up and down, cars have become much more fuel efficient, and inflation has been biting into state income from gas taxes. In addition, there is a whole new challenge in the shape of electric vehicles that in the future will increasingly undermine fuel sales income for states.

Left with no options, 22 states have raised their fuel tax since 2012 and more will likely resort to the unpopular measure in the coming years. Since January 2017, Governing magazine notes, three states have passed laws to increase the gas excise tax: California, Tennessee, and Indiana. In California, the total tax, state plus federal, is now 57.20 cents per gallon. In Tennessee, the figure is 39.80 cents. In Indiana, the overall tax consumers pay on a gallon of gas is 51.24 cents.

According to one research organization, the Institute on Taxation and Economic Policy, the number of states that have already introduced higher gas taxes is unusual, and what’s more, this number will continue to rise, with another seven states likely to pass higher gas tax laws before the end of the year: Alaska, Louisiana, Wisconsin, South Carolina, Oregon, and Oklahoma, and West Virginia. Why? Because, although taxpayers can hardly be too happy about it, business groups are backing the higher taxes, ITEP analyst Carl Davies.

It’s a simple truth, though not a widely liked one, that states—and national governments—need income from taxes to produce goods and services for the people who pay the taxes. While it’s true that in the last decade there have been good reasons to keep prices at the pump steadily taxed, now that demand for road infrastructure and transport services is growing, states are finding themselves short of the money needed to respond to this demand.

The Great Recession saw prices shoot up to above US$3 per gallon, and by 2014 they’d gone above US$3.50 per gallon. That would have been a very bad time to even consider raising the tax. Yet now prices are at historic lows thanks to shale and to a global glut. In fact, prices are so low that on some part of the States, rivalry between two or more gas stations has led to prices as low as US$0.95 and even US$0.78 per gallon. True, these extremes were touched for a few hours but they are indicative of price developments prompted by global fundamental trends.

So, drivers across the states that have not yet hiked their gas tax can reasonably expect that, in the not too distant future, they will have to pay more for gas, regardless of which way global prices go. That’s the bad news. The good news is that these global prices are unlikely to go much higher than they are now, as long as shale producers continue ramping up their output and lowering production prices. Unless, of course, it turns out that the shale boom is actually a bubble as some observers argue.

"Unequivocally Bad?" Gas Prices Soar Over 20% YoY - Most Since 2011

In December 2014, as gas prices had plunged over 20% YoY, Janet Yellen proclaimed "from the standpoint of the U.S... the decline we"ve seen in oil prices is likely to be, on net, a positive," and that narrative of slumping gas prices being "unequivocally good" for Americans was spewed everywhere across linear-thinking mainstream media. So we wonder, with gas prices up 22% year-over, the fastest spike since 2011, is that "unequivocally bad" for America?

Remember when Janet Yellen, and all the tenured economists in her circles said that plunging gas prices are great for the consumer?

The dramatic plunge in oil prices might be spooking some investors, but Janet Yellen isn"t worried at all.

The Federal Reserve chief believes oil tumbling is like a tax cut for American consumers.

"From the standpoint of the U.S. and U.S. outlook, the decline we"ve seen in oil prices is likely to be, on net, a positive," said Yellen at a press conference on Wednesday.

"It"s good for families, for households. It"s putting more money in their pockets," she said.

"On balance, I would see these developments as a positive," she said.

Well, as we noted last week, as GasBuddy warned of "sticker-shock" - as motorists will shell out $52 billion more over the course of the year compared to 2016, we are about to find out just how bad for the consumer rising prices will be.

Retail gas prices surged again last week, with the average price for regular gasoline at U.S. pumps rising 11.97c to $2.3777/gal, according to Lundberg Survey.

This is a 20.6% year-over-year surge - the biggest since October 2011.

By Janet Yellen"s logic, the 20-plus percent surge in gas prices means "less money in Americans" pockets" and as a final reminder, this is what happened to the US Macro-economic data, the last time gas prices surged at the current pace...

Trilby Lundberg, president of Lundberg Survey, explains there are two primary causes to rise in average retail price:

1. "Retail gasoline has been catching up to earlier crude price rises”, and


2. "More states added gasoline tax hikes and federal regulations reduced amount of sulfur in gasoline by two- thirds, both effective Jan. 1"

We wonder what Janet Yellen will have to say about this "drag" on the consumer... or is it now an indication of the "confidence" in the US economy?