Our editorial: Put brakes on driverless auto taxes

The Detroit News

Driverless technology is taking off, but Michigan is taking a wait-and-see approach before joining some other states that are eager to begin levying new taxes on autonomous vehicles. That’s the right call.

Still, as the state Legislature starts rule-making this fall, it will have to answer these questions: Will the current fuel tax be sufficient for repairing roads and investing in smart infrastructure as mobility technology evolves? And if not, who will pay?

“There’s not yet consensus on (the) matter,” says Wade Newton, a spokesman with Auto Alliance. “This is one of the many areas that need to be explored when it comes to self-driving vehicles.”

Since automated cars are still being tested, this interim period is trial-and-error for legislators. Without clear signals from the market whether consumers prefer individual or third-party ownership of the vehicles, the challenge of devising tax policy is daunting.

For example, independent D.C. think tank Eno Center for Transportation recently proposed a mileage fee on automakers for self-driving cars operating autonomously that could raise up to $300 million per year, said Paul Lewis, vice president of policy and finance for the center.

The tax assumes, however, the market will prefer company ownership and pay-per-mile use, says Michigan Department of Transportation spokesman Rob Morosi.

In Massachusetts, there is a 2.5 cents-per-mile tax on self-driving cars; in Tennessee, a 1 cent-per-mile fee on cars and a 2.6 cent-per-mile fee for autonomous trucks with more than two axles.

Michigan has not considered such a tax yet, Morosi says.

Currently, consumers pay state and federal gas taxes or registration fees, or a combination of both. The Michigan Legislature upped its gasoline tax and increased registration fees in 2015, but the federal gas tax hasn’t changed since the ’90s.

As fuel economy improves and electric vehicles proliferate, the gas tax pool becomes shallower. Automated vehicles could further this trend since they economize fuel, are more likely to be electric and might break the existing tax model that’s based on individual ownership.

In addition, automated vehicles will need software that essentially “talks” to the car, also known as Dedicated Short Range Communications radios, says Collin Castle, an ITS program manager for the Michigan Department of Transportation. This means integrating these radios into existing freeways, at a cost of about $5,000 an installation, and re-engineering intersection signals, at about $20,000 a location.

“MDOT has made a significant investment in supporting infrastructure,” Castle said. “The cost may seem high, but we think there’s a cost-reasonable way to do this effectively.”

One way is through partnership with the private sector during testing and construction. MDOT recently partnered with 3M, a company that provided signs, barrels and pavement markings, and with General Motors Corp. for signal testing.

Rather than levy taxes pre-emptively, the state should seek first to encourage partnerships that would speed development so legislators can see how the market adapts to this new wave of smart vehicles.

Still, some underlying legislation remains crucial.

“We believe it’s important for legislation to happen now,” says Newton. “This will allow our innovation to be further refined and deployed into the market. These are truly potentially life-saving technologies that can expand mobility and remove barriers for the traveling public.”

The alliance supports the Self-Drive Act in Congress, which the House Committee on Energy and Commerce unanimously approved. The act regulates commerce, data security and motor vehicle safety — issues that could differ from state to state.