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by eriken 2955 days ago
This is an awesome example of how tricky it is to innovate and regulate towards cleaner environmental behaviour.
2 comments

Tax the fuel to cover the total externalities
Doesn't work if it's teens converting family money into personal money. That is a situation with some surprising similarities to money laundering.
Why is that a concern to anyone other than the person who pays the bils (presumably the parents)

No different to someone mining bitcoin using their parent's electricity, or someone delivering pizzas using their parents car

Going forward we'll have to figure out how to tax electricity used for charging electric cars(probably special chargers that have a car-taxed tariff).
Why? Does electricity used by cars have more externalities than electricity used by a washing machine?
No, but at the moment(at least over here in UK) the tax on petrol and diesel covers road building/maintenance for the entire country. With this tax slowly disappearing, we will have to find another way to tax people who use the roads, and the best way to do that is to tax the fuel they use as it's directly proportional to their use.

Same reason why heating/farming oil doesn't have this tax, even though it's technically just diesel and your diesel car would happily run on it. Yes, the electricity used in your car is the same as the one used in your washing machine, but it should be taxed more because of its use, exactly the same as we do with oil already.

It seems to me that taxing something based on its use is a pretty much just a way to set up exactly these kinds of loopholes that continually need plugging.

Instead of taxing gasoline to help fill in the road budget, why not tax vehicles based on actual road usage, and their size and weight? Then you don't have all of the "electric cars and bikes don't pay gas taxes" stupid debates. An electric car uses just as much (if not more, due to weight) of the road as a gasoline car, while a bicycle uses so much less (and pretty much equivalent to any use of public space like walking, using a scooter, etc) that it makes the most sense for that to just be accounted for out of the general fund.

You could do this based on odometer, or based on automatic toll collection devices, or whatever. Automatic toll collection devices are probably better, because you could also include congestion charges for places where roadway real estate is low and congestion is high, like big cities.

The main reason to have taxes on something like fossil fuels would be for emissions reasons, as there is an external cost being imposed on everyone else by their emissions, and that money could go towards paying for health care costs, providing tax breaks for HVAC systems with air purification, carbon offsetting, and the like. But such a tax should be imposed regardless of use, as any use is going to wind up with the same or similar emissions.

At least in most of the US (can't speak for all 50 states) vehicles are taxed based on weight- a 1 ton pickup will cost more each year to register than a compact car or motorcycle. And what is a better method to tax based on usage than taxing fuel? Do you really want to have to log every mile driven, and submit it to the IRS? Parent poster had a good point, in that this will need to be examined in regards to EV usage of roads, but how much $ do you think it would cost to have automatic toll collection points to cover the entire US road network, and where are those billions/trillions going to come from?

And I would also like to point out that the main reason to tax fuel isn't to cover emissions, it's to help pay for the incredibly expensive roads that we all use (regardless of mode of transport). Sure, it is a good side effect that inefficient vehicles are taxed higher than more efficient ones, but that is a side effect, not the goal. Your proposed solution is far more complicated than just metering EV charging separately and taxing a portion of it.

> Instead of taxing gasoline to help fill in the road budget

In the UK we don't. We tax gasoline because it has negative externalities (same as us taxing cigarettes and alcohol). It goes into the central budget that's run by Phillip Hammond in the UK. Out of that, and income tax, national insurance, VAT, alcohol tax, etc, he funds the national road network, trident renewal, the state pension, the nhs, etc. Some of that money goes to councils to spend on what they want.

Electric cars don't have those externalities of burning gasoline in the middle of our cities.

While we don't tax fossil fuels used to generate electricity, we do subsidise non-fossil-fuels used to generate electricity. It probably should be the other way round, however in any case burning gas (not oil) in a power plant out of town and charging an electric car is better than burning oil in an ICE in the middle of a city and thus should attract far less tax. Currently 42% of UK electricity is being generated by Gas - no other fossil fuels.

The councils then take the money from central government, and the local council tax (about £1500 a household), into a local pot, and fund things like bin collections, maintaining parks, operating libraries, and maintaining the local roads.

> why not tax vehicles based on actual road usage, and their size and weight?

Until relatively recently that's not really been possible (ANPR makes it possible), hence taxing fuel as a proxy.

> Then you don't have all of the "electric cars and bikes don't pay gas taxes" stupid debates.

Given that the cost of a road is wear and tear (which a pedestrian or bike causes pretty much zero)

Charging more than £5 a year for even the most extreme cyclist wouldn't make any sense. Because damage increases at 2^4, 1 mile car does about 1/100,000th of the damage of a lorry. A bike and car is a similar ratio - therefore if you charged a bike 1p per mile, you should charge a car £1000 a mile and a lorry £100 million a mile.

"why not tax vehicles based on actual road usage, and their size and weight?"

Because this relies on either odometer readings, which, at least here in the US, you wouldn't be able to say how many miles were driven in one state vs the next. Or it would rely on tracking the location of the vehicle, which is downright creepy and sets off all kinds of alarm bells in people.

Petrol tax goes into the exchequer, it's not ringfenced for the roads. Most roads are funded from council tax in any case.

Petrol and VED raises £33b a year, but total road spending (including local councils) is under £10b.

The solution to rationing road usage and paying for their use is road charging (with heavier vehicles paying proportionally more based on axel weight, and different charges depending how congested the roads are) which should pay for the maintenance of the roads, new road building, and renting the land to have the roads on.

This is kind of a perverse incentive though:

- Discourage "bad" thing (driving, drinking, smoking, sugar, ...) by applying heavy taxes

- Occurrence of that thing goes down

- Complain about falling of tax revenue

I'm generally in favour of applying taxes like this, but they need to be based on the actual harm/externalities, and be targetted effectively. Taxing electricity-used-for-vehicles seems easy to game, and only indirectly related to harm. It might be more effective to tax fossil fuels, both for transport and electricity generation, due to their environmental problems; and tax ownership of vehicles to cover expenses (infrastructure, medical care, ...) and discourage excessive use (reducing fatalities, etc.). We have car tax for the latter; perhaps it could be made proportional to use by checking odometers during MOT? (Although it's currently perfectly legal to alter odometers, as long as it's not used to defraud someone when selling the vehicle)

>>and discourage excessive use (reducing fatalities, etc.). We have car tax for the latter;

If you mean VED I don't think that achieves anything, perhaps only discouraging people from buying cars with particularly high CO2 emissions, but if you can afford a sports car with 200g/km+ emissions, you can probably afford the annual VED on it. Besides, with VED refresh recently it almost doesn't matter, you only discourage people from buying expensive vehicles as they incur extra tax due to their purchase price, not their emissions.

>>perhaps it could be made proportional to use by checking odometers during MOT?

The issue here is that obviously you have to prove that those miles were done in United Kingdom, and obviously it's not illegal to use your car abroad. Taxing fuel has the nice property of the taxes going into the budget of the country where you buy it, so the assumption is that visitors to the UK will buy fuel here and contribute at least a bit to the UK road budget - and the same goes for British drivers going abroad.

Wear and tear on the roads done by driving cars.
Washing machines don't use roads.
So you want to tax the usage of roads, not the fuel.

Tax the fuel to cover the externalities of that (pollution) Tax the road use to cover the externalities of that (cost of using the road)

Why? We're still in the phase of giving out huge subsidies for them. More likely would be a general weight-miles tax to cover repairing the roads.
How much money do we pay to keep the middle east from devolving into all-out war and keeping a stable oil price?
Eh? Currently or in the future? The war is mostly already there; while Iran and Saudi aren't directly shooting at each other they've on opposite sides of the wars in Syria and Yemen.
Over the last 50 years the US government has spent trillions of dollars and thousands of american lives on keeping the oil flowing from the gulf, directly funding the current shooting wars, but only to a level where the oil carries on flowing.

That's a massive subsidy

This is commercial enterprise, not regulation. Taxation could simply make driving them around too expensive.