August 20, 2012

Fuel efficiency dreams backfire; Big Brother seen as the solution

By Fuel efficiency dreams backfire; Big Brother seen as the solution

Government officials have already attempted to install tracking devices on cars belonging to suspected criminals. Although the Supreme Court ruled that the process required a search warrant, a variant of these Orwellian devices may soon make their way to all vehicles.

Costs from the federal government’s 54.5 mile per gallon fuel efficiency mandate are already large.  However, these standards are also being blamed for decreased transportation revenue.  Because spending on new transportation projects can never decrease, governments are developing creative tracking devices to maintain spending.  This new tax is commonly referred to as the Vehicle Miles Tracked tax (VMT) and requires consumers to pay for each mile they drive.

The Obama administration has been unwilling to take a clear position on this creative technology.  In 2009, Transportation Secretary Roy LaHood wanted to study the program, but the administration denied any desire to continue with the study. However, in May 2011, plans to study and implement this policy were considered, then shelved after public outcry.  In March, 2011, the Congressional Budget Office released a detailed report that suggested the VMT would be a better program than the current fuel tax regime.  In June 2012, the U.S. House of Representatives accepted an amendment that banned further VMT studies.

But while this plan is currently delayed at the federal level, several states and regional agencies are moving forward with the plan.  Oregon has already taken several test runs with the program and is looking to move forward with implementation. Minnesota has analyzed the program, as have many other states.  In July, the San Francisco-area Metropolitan Transportation Committee voted to study the proposal.

This proposal raises several concerns:

First, it involves a massive invasion of privacy.  These devices would require consumers to install GPS-like devices that would allow the government to determine where and when the individuals were traveling.  Of course the government would never use these for untoward purposes.

Second, the costs of administering the tax will be massive.  In addition to the personnel costs of monitoring compliance with a new bureaucracy ($300 million would merely fund the study of the program) installing the devices will also be costly. The devices in Oregon cost up to $225 each and if installed on the 250 million cars in the United States this would cost consumers $56 billion.  This is merely the fixed cost of establishing the program.

Third, in addition to the sizable implementation costs, consumers will also deal with ongoing fees.  Under  the Bay Area’s ambitious proposal drivers could pay $1300 annually. If this figure were applied to the nation’s 203 million  drivers it would amount to a $263 billion tax increase.  Under the lowest estimates this tax increase would cost $10 billion annually.

Finally, the program’s incentives contradict the mandate that vehicle fuel efficiency be increased to 54.5 mpg by 2025.  The program is designed to allow governments to receive revenue from customers who chose to purchase efficient vehicles instead of pay high fuel costs.  Therefore, this would reduce some of the incentives that have produced increased fuel efficiency.

Not all fiscal conservatives oppose the plan.  But,  the size of the program and the potential privacy ramifications reveal the importance of keeping a skeptical eye on these proposals.

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