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January 20, 2006

A mileage tax

Funding roads is an important function of state governments, and in today's "Economic Perspective" N.C. State University's Mike Walden discusses a new way that some states are going about it.

"It’s called a mileage tax, and I think now may be an opportune time to talk about this in North Carolina because many people are upset with gas prices and the gas tax. In fact there’s a move to lower the gas tax in North Carolina," says Walden, a professor and extension specialist with the College of Agriculture and Life Sciences' Department of Agricultural and Resource Economics.

"A mileage tax would really divorce tax payments for roads and highways from gasoline. In fact what you would be charged on is not how much gas you buy but how many miles you drive," he explains. "This would actually replace the gas tax.

"What would happen is that a global positioning device would be put in cars. It costs about $100. It would keep track of your mileage you drive on highways. When you go to fuel up at the gas pump this information would be relayed to the gas pump, and you would be charged a fee based on how many miles that you’ve driven.

"So it would make sure that there is a direct link between miles driven, which really measures a driver’s use of the road, to what you pay for that road usage," Walden says.

"California and Oregon are actually running pilot programs using a mileage tax."

Posted by deeshore at January 20, 2006 08:00 AM