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Totota Prius -- The Enemy?

No good deed goes unpunished.

As more Americans become sensitized to the issue of greenhouse gas emissions and switch to more fuel efficient cars, they are actually having a negative impact on the cost of gasoline for the rest of us.

The Portland (Maine) Forecaster ran a story this week in which local transportation officials complained that gas tax revenue was going down because cars are becoming more efficient. John Duncan, executive director of the Portland Area Comprehensive Transportation System (PACTS), told legislators that “the gas tax is not providing us with enough revenue now and it is only going to get worse in the future.”

The culprit? More fuel efficient cars like the Toyota Prius. As Duncan pointed out, there are more cars using local roads and paying less for that use. So what does PACTS  want to do? They want to raise the gas tax. Those unlucky souls who drive less efficient cars will thereby end up paying for the good deeds of those who are environmentally conscious. I question the fairness of that equation. People buying these new cars not only end up saving hundreds of dollars on the cost of gasoline, they end up making the rest of us pay more.

Here’s how the math works out using the Prius as an example —

2010 Toyota Prius
MPG: 50
Annual mileage: 15,000
Gallons of gas purchased: 300
Federal/state gas taxes per gallon (Maine): $.494
Total gas taxes paid: $148.20

Average U.S. Passenger Car
(Data from Bureau of Transportation Statistics)
MPG: 22.6
Annual mileage: 15,000
Gallons of gas purchased: 634
Federal/state gas taxes per gallon (Maine): $.494
Total gas taxes paid: $313

Difference in gas taxes paid: $164.80

From one perspective, it can be argued that the Prius (and other hybrids) are cheating states and communities out of the revenue they should receive for building and maintaining roads. Faced with this growing shortfall, more and more transportation systems will be forced to do what they are considering here in Maine: raise the gas tax on everyone.

I think there is a fairer way to handle this revenue issue.

First, my premise is that we want to encourage more people to drive cars like the Prius. Forgetting the gas tax issue for a moment, the benefits are enormous for the Prius owner: a savings of hundreds of dollars in gasoline costs and the contribution they make to help solving the emissions problem. That’s a win-win for everyone. On the other hand, noble as they might be, they should still pay for their fair share of road costs.

Instead of an increase in the gas tax, at the time a hybrid or other high mpg car goes for its annual registration, the owner should be assessed a user fee based on the difference in tax revenues they will pay at the pump and what would be expected in gas tax revenues from the average car owner. Using the Prius example, at the time of registration they would be charged an additional $164.80 as a road user fee. The states can either use an average number of miles driven to compute the fee, or even do it retroactively based on the actual mileage driven during the prior year.

Rake, aren’t you creating a financial disincentive for people to buy more fuel efficient cars?

Not at all. The savings in gasoline costs are significant. Based on the average price of gasoline here in Portland, Maine, a Prius owner would save $644 per year in gasoline costs over another relatively fuel efficient car like the Kia Rio. Subtract the aforementioned road user fee and the hybrid owner still saves $480 annually. You can find a calculator to help compare fuel costs and emission levels for most cars at HybridCars.com

Even as we encourage people to buy more fuel efficient cars, we need to keep in mind the fairness (or lack of it) of forcing one group to pay the costs of another group. All of us who drive use the roads and are responsible for their upkeep and maintenance. A road user fee is the fairest way to share the burden. And I’m sure that most Prius and other hybrid owners wouldn’t want it any other way.