More mileage you do, more you pay

 “Looking at the money makes you realise that a car isn’t always a good idea,” said Van Dedem, a commercial sales manager for IBM at Eindhoven, Netherlands. But his pricey ride was not in a taxi. He was driving his own Volvo XC60.

The car had been outfitted with the meter so that Van Dedem could take part in a trial of a controversial government tax proposal to charge drivers a fee for the miles they drive. The meter also factors in the cost to society in the form of pollution, traffic congestion, greenhouse gas emissions, and wear and tear on roads.

Hooked up to the Internet wirelessly and to GPS, the system tabulates a charge for each car trip by using a mileage-based formula that also takes account of a car’s fuel efficiency, the time of day and the route. At the end of each month, the vehicle’s owner would receive a bill detailing times and costs of usage,  although participants in the trial did not have to pay the charges.

Governments in car-clogged regions of Europe, Asia and even the United States have shown an eagerness to explore such systems, but they face a nagging challenge in placing them in private vehicles. Even in environmentally conscious places like the Netherlands, voters and politicians often vehemently oppose the programmes, citing privacy concerns about the monitoring of drivers’ whereabouts and the introduction of what amounts to a new type of tax.

The foiled plan
In the Netherlands, where by some accounts residents have the highest average commuting time in Europe, the government had planned to institute a nationwide system next year. But the plan was shelved when a new government came to power in 2010.

“The winning party said, ‘If you elect us, there won’t be new taxes,' and killed the plan,” said Ab Oosting, a city official in Eindhoven.

Supporters of the meters contend that the charges are more equitable than current taxes like automobile purchase and registration fees because they derive from actual use rather than mere ownership. If imposed, they could supplant gas and vehicle taxes as well as tolls. “At the beginning you’re looking at it all the time and thinking of costs, and pretty quickly it starts to influence what you do,” said Van Dedem.

Germany has already started using a GPS-based charging system for trucks, and France is planning to do so, a step that is less politically volatile than charging drivers of private cars.

In the United States, states like Oregon, Texas and Minnesota have explored mileage charging systems, but the first tentative proposals have faced obstacles there as well. A longstanding proposal suggested a transitional rate of 0.85 cents per mile in 2015 and 1.85 cents per mile by 2018. Although the programme was primarily an attempt to recoup lost revenue from gasoline taxes, it was also intended to test the waters for distance charging that would eventually apply to all cars.

“We started with a new type of car where the policy argument was clear: Electric vehicles don’t pay gas taxes,” said James M. Whitty, manager of Oregon’s Office of Innovative Partnerships and Alternative Funding. “But the idea was to get by the anxiety about what the new tax system was about, to see if it would be acceptable.”

The Oregon proposal did not envisage installing real-time GPS-based meters in each car, but merely recording the mileage though the odometer. An earlier trial using a GPS unit had stirred a public outcry even though the unit did not reveal locations as it relayed data to the state. “The public didn’t trust that,” Whitty said.

Eric-Mark Huitema, a transportation specialist with IBM, which developed the system used in the Netherlands in collaboration with the semiconductor company NXP, said that the system performed well in the testing period.

Under the shelved plan in the Netherlands, rates would have varied from 4.5 to 45 cents per mile. Government studies predicted that 60 or 70 percent of drivers would pay less than under the current system of car taxation.

The European Union continues to prod member states to try distance charging despite the setbacks. High car and gas taxes have failed to stem the growth of car use in Western Europe, leaving densely populated countries paralysed at rush hour.

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