Cost of Driving, Part II
In my previous post on this topic, I described how per-mile insurance would raise the cost of driving but lower the cost of owning a car (with a net reduction in overall cost). This should reduce overall driving, but it would also likely increase vehicle ownership. Some people who cannot afford a car under the current insurance system, would be able to afford one if they paid for insurance only when they drive--when they take their children to the doctor, go to a job interview, get out of the path of a hurricane.... Some years ago, a young man bought an old car from me for $100. I thought I was doing him a favor, but he quickly discovered that he could not afford the taxes and insurance, and I believe he had to get rid of it.
Other people who already own a vehicle should buy a second one. In my own family, we have both a mini-van and an economy car. I drive the economy car most days, but it is totally inadequate for the whole family. If, as Atrios suggests, we should get rid of one of them, it's the economy car that would have to go. And I know plenty of people who's only vehicle(s) are vans and suv's--and plenty of couples who have two! Some of these people are finding their guzzlers very expensive these days, but they are not about to junk them. We should be encouraging those people to buy economy cars, and put their guzzlers in the garage--for special occasions. And we should structure our tax and insurance systems to make it more, not less, economical for them to do so.
And that leads me to my second suggestion: eliminate all vehicle taxes. Eliminate ad-valorem taxes on vehicles, eliminate all tag and registration fees, eliminate sales taxes on vehicles--as well as on parts and repairs. Raise gas taxes enough to make it revenue neutral. One nice advantage of this, in Virginia at least, is that our total taxes would go down; about 12% of our gas tax revenue comes from out-of-state motorists. I would even have gas taxes pay for the mandatory emissions and safety inspections we get every year--and feel not the slightest twinge of guilt at making out-of-state motorists pay 12% of that cost. It's small enough return for the pollution and congestion they give us.
As with per-mile insurance, this simple change in cost structure would make it less expensive to own vehicles--and more expensive to drive them. And both of those changes would be good things. Permalink 12:50 AM