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Aaron McKenna: Why we should move to a GPS based mileage tax on motorists

The US state of Oregon is becoming one of the first places in the world to trial the idea of rolling out per-mile taxation of motorists. We should follow suit.

Image: stocksolutions via Shutterstock

THE GOVERNMENT WAS gracious enough not to hit motorists in this year’s budget with another increase to the staggering amount of tax collected on fuel. Politicians were perhaps blushing a tiny bit at the idea of asking for more than the €61.66 they already take from every €100 of petrol sold.

The taxman’s share is a disgraceful example of sticky State hands in the till. A significant proportion of driving is done to and from work, the income from which the government already levies a hefty percentage. From what the Minister of Finance sees fit to bequeath to you of your salary he then expects two thirds back from what you pay out to get to and from the place where you help generate so much tax revenue for him.

If you’re not driving yourself then the State, through its wholly-owned transport subsidiaries, is looking for fare increases that are running ahead at eight to ten times the rate of inflation in the country. And that’s just the increase for 2014, atop all those we’ve had previously and no doubt those to come.

Driving is looking preferable to public transport

At this rate, driving is looking preferable to taking public transport for many commuters, if they happen to have a car handy. A quick tot up on the Google Maps fuel calculator says that a trip from a Dublin suburb such as Blanchardstown in to East Wall Business Park would cost €1.86 in fuel each way. It’ll cost you a minimum of €2.15 using a Leap Card on the bus, with the added hassle of adhering to the curtailed timetables of the buses and getting packed in to a sweaty sardine can after standing for a while in the lashings of rain.

Public transport is probably not achieving its core objectives if taking a car starts to look remotely attractive by comparison, even accounting for all the additional costs of insurance, tax and so on.

One way or another the ordinary Joe or Jill taxpayer trying to get to work to generate that money for Mickey Noonan and company to pay for James Reilly’s public relations advice are really being taken for a ride.

It is quite an odd taxation system we have for drivers in one sense, in that a person trying to get to work pays as much tax on their fuel as a person dropping their kids to a school a ten minute walk from the house, or a person heading off on a jolly sightseeing tour.

It has been built that way for practical reasons. Tax on fuel is a simple input: the more you use, the more you’re presumed to be using the roads and the more you ought to pay for it. But that’s both quite imprecise today, given the technology used in new car engines, and also quite economically broad to disincentivise someone who wants to get to work equally to someone who wants to take a Sunday drive to the beach.

Per-mile taxation

The US state of Oregon is becoming one of the first places in the world to trial and think about the idea of rolling out per-mile taxation of motorists. The 5,000 volunteer motorists who will help trial a Vehicle Miles Travelled programme will use either odometer trackers or GPS devices to clock the mileage they drive. Eventually the state officials hope to roll out smartphone apps to supplement basic meters, keeping the cost of the programme down.

Users will pay 1.5 cents per mile travelled, versus the state gas tax of 30 cents per gallon (7.89 cents per litre). The state doesn’t expect users of electric cars to flock to sign up to the trial, but they have it in their mind to eventually catch all drivers to pay for the wear and tear on the roads they travel over.

There have been privacy concerns over the usage of GPS trackers in cars, and the state has been working hard to ensure that data is anonymised and subsequently wiped after 30 days in the tax records. Other US states have been watching the effort closely, and so should countries like ours.

The technology is now available, and becoming cheaper and more feasible all the time, to consider a road usage tax that is smart and fair.

For example, the government could offer tax free allowances for people trying to get to and from work. Congestion charges could be introduced for certain areas, like city centres, and for certain times. People who don’t have work to go to could pay higher tax for using the roads during peak commuting hours as a measure to reduce traffic jams. The Dublin Port Tunnel already operates this sort of a system, charging cars €10 to beat the traffic into and out of the city during peak commuter times versus a standard €3 charge.

People could still be given tax breaks for driving more economical cars, but it is unfair that electric car drivers for example are practically exempt from paying for the wear and tear on roads that is ostensibly funded by tax on fuel.

Transparent taxation

A system that sends a bill to motorists at the end of the month for their road usage is also far more transparent than charging them an unseen but significant amount of their fuel receipt. Government likes the present system because it is so opaque, thus provoking less questioning from taxpayers as to how the money is being spent. A tax system that government officials like is inherently one that taxpayers ought to dislike, and tax transparency is an important part of empowering people to ask questions of their politicians on state tax and spending.

The capabilities of technology have moved on sufficiently that government, if it was so motivated, could run a far more sophisticated system for raising revenue for the upkeep of our roads. It could be a fairer, user-pays system and be tailored towards the economic needs of the country. We could also ditch the costly war on the likes of laundered fuel, particularly if the initiative were undertaken in conjunction with the north.

We should watch this programme being trailed in Oregon closely, and start to think about the future of motoring taxes in this smart economy of ours.

Aaron McKenna is a businessman and a columnist for He is also involved in activism in his local area. You can find out more about him at or follow him on Twitter @aaronmckenna. To read more columns by Aaron click here.


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