Fuel for Thought

0
4331
article top

By Tom Yamachika – Our Department of Transportation (HIDOT) was recently in the news because it won a $4 million federal grant to come up with a “reimagining” of the taxes we currently pay to support our highways and bridges.  (Although we still had to come up with $1.5 million in matching funds.)  What does this mean for all of us?

Currently, when we go to the gas station and buy gasoline, we might not realize that there are lots of taxes baked into the price per gallon.  There is a federal fuel tax of 18.4 cents, a state tax of 16 cents, and a county tax that ranges from 8.8 cents on the Big Island to a high of 23 cents on Maui.  Then the sales price is bumped up for state general excise tax (GET), which can add another dime if the price per gallon is around $2.50.

Last legislative session, HIDOT asked the Legislature for hikes in the state fuel tax, the vehicle weight tax, and the annual vehicle registration fee.  The Legislature said no.  However, the HIDOT later grumbled that it wouldn’t be able to fund any capacity expansion projects for the next twenty years.  Gov. Ige already has said that HIDOT will return to the Legislature next year to renew its plea for additional money.

One reason HIDOT asked for a triple whammy of tax hikes, rather than just one kind of tax, was that their income from the fuel tax is declining.  This phenomenon is not unique to Hawaii; many states are experiencing the same thing.  Why?  Part of the rationale for the fuel tax is that, as a policy matter, we want to drive down the usage of fossil fuels by making them more expensive.  And it’s working.  People are using electric cars, hybrids, and alternative fuel vehicles.  Maybe it’s a good thing from a social policy standpoint, but it’s not so good for HIDOT revenues.  Thus, they are asking for hikes to the other types of taxes so that the motorists who did buy the hybrids and alternative fuel vehicles pay their “fair share” of road maintenance costs.  In this coming legislative session, we probably can expect HIDOT to ask for the same kinds of hikes again because it will take time to set up any new taxing system even if it is fueled by $4 million in federal money (as well as, don’t forget, a substantial wad of state money).

And what kind of new system are they thinking about?  Details of the plan haven’t been made public, but it’s supposed to involve a per-mile usage charge.  That means the existing fuel tax presumably would go away, and HIDOT would capture our odometer readings.  The “Manual Reporting” phase described in HIDOT’s grant application envisions pulling data submitted with the annual safety checks, and the “Automated Reporting” phase talks about smartphones and other technologies placed inside vehicles.  From that data HIDOT will generate a billing.

The problem with a HIDOT billing is that motorists are not used to seeing one and might be resistant to complying when it comes time to pay.  How would HIDOT go after the motorists who don’t pay?  Would they create a whole new bureaucracy to do so, or would this job be passed to the Department of Taxation (which has already said that it is up to its eyeballs in its existing work)?  Or would HIDOT simply rely on the vehicle registration divisions in the counties to deny registration to those who haven’t paid the tax, and on county police to stop vehicles with expired registrations?  At a minimum, the counties will likely have extra work and would want to be paid for it.

Finally, there is “Automated Reporting.”  Does that mean our government will require “Big Brother” tracking devices in every car, which could cost taxpayers more money and could raise serious constitutional privacy issues as well as policy concerns?

Lots of questions remain about this program, which gives us much to look forward to as HIDOT rolls out the details of their plan.

Comments

comments

Leave a Reply