The Truth About Cars » Taxes The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 23 Jul 2014 16:29:19 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Taxes Bipartisan Senate Bill To Raise Fuel Taxes For The First Time Since 1993 Thu, 19 Jun 2014 13:00:59 +0000 gas-pump-save-ftr

For over two decades, the federal fuel tax has held at 18.4 cents for gasoline and 24.4 cents for diesel per gallon sold. A bipartisan bill working through the United States Senate could soon change this, especially as the nation’s Highway Trust Fund — used for funding infrastructure projects — comes closer to running dry by August of this year.

Reuters reports Sens. Bob Corker of Tennessee and Chris Murphy of Connecticut want to raise both taxes by 12 cents, which would be spread out over two years prior to linking future increases to inflation. The senators also proposed tax cuts to make up for the increase, though nothing was specified at the time.

Meanwhile, some legislators want to fund the trust through a corporate offshore profit tax repatriation holiday that would resemble a 2004 proposal led by former president George W. Bush: 12 months, 85 percent deduction for dividends paid. The Joint Committee on Taxation estimated the holiday would bring in $20 billion during the period, but would lead to expectations for more holidays down the road.

President Barack Obama opposes this method, believing “it would give large tax breaks to a very small number of companies that have most aggressively shifted profits, and in many cases, jobs, overseas,” according to White House representative Jay Carney.

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AAA: 51 Percent Surveyed Willing To Pay For Better Roads Thu, 12 Jun 2014 10:00:03 +0000 Carmageddon

As those inside the Beltway debate how best to fund their responsibility for the nation’s transportation infrastructure, a AAA study finds most Americans would pay more taxes for better roads.

Autoblog reports 67 percent of the 2,013 surveyed by AAA want the federal government to get it together and put more money into maintenance, with 52 percent in support of an increase in fuel taxes. Further, 51 percent surveyed would go as far as supporting a candidate who would support increases in funding for road maintenance and construction.

AAA CEO and president Bob Darbelnet added that many Americans were “willing to pay a little more” in taxes if the result led to “better roads, bridges and transit systems,” having become “fed up with record-long commutes, unsafe highways and never-ending potholes caused by political inaction.” In turn, the organization claims drivers would save $324 annually on road-related repairs for their vehicles.

AAA’s call to action comes under the potential threat of road work delays when the Highway Trust Fund — whose replenishment depends on the 18.3-cent/gallon gasoline and 22.4-cent/gallon diesel taxes that last saw an increase over 20 years ago — runs out of funds sometime this August. The Obama administration and a few members of Congress have offered solutions to the funding problem, but nothing more as come of them thus far.

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Abe Administration Pushes Automakers, Nation Away From Kei Cars Wed, 11 Jun 2014 11:00:09 +0000 Nissan Moco

For ages, the kei car has been one of the darlings of the automotive world, owing to its tiny size and equally tiny engine (that also netted owners a smaller tax bill). Alas, Japan’s littlest cars may soon be put in a toy box destined for Goodwill as the nation’s government puts the pressure on both automakers and owners to move toward supporting bigger offerings.

The New York Times reports the Japanese government introduced three tax increases on kei owners, including a 50 percent boost in the kei car tax meant to bring their tax burden close to larger vehicles. Officials claim the cars are becoming a drain on the Diet’s coffers both on the tax and free trade fronts, and as they cannot be exported to other markets — college campuses withstanding — the keis are a waste of profit and R&D for automakers.

The Abe administration may see push back from owners and automakers alike, however. Smaller automakers such as Suzuki and Daihatsu use the R&D from their kei offerings to better compete in other markets where similar offerings are sold, as well as adding more content to make their cars more attractive to their local market base. Owners, meanwhile, opt for keis because of the low ownership costs involved, and the greater mobility offered in areas where mass transit is few and far between.

The tax increase on the kei has affected both parties, with automakers losing sales and owners who may decide not to buy any vehicle altogether; sales are expected to drop from 2.23 million in 2013 to 1.7 million in 2015.

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Michigan Legislators, Business Groups Debate Proposed Fuel Tax Hike Tue, 03 Jun 2014 11:00:22 +0000 May 2014 Michigan Gas Prices

State senators in Michigan returned to Lansing Monday in a rare session to discuss raising fuel taxes to fund improvements to the state’s road infrastructure.

Detroit Free Press reports majority leader Randy Richardville of Monroe is proposing a new tax to replace the current fuel taxation scheme. At the moment, regular unleaded fuel is taxed at 19 cents per gallon, while diesel sees 15 cents per gallon go to Lansing’s coffers. The new scheme would replace both taxes with a wholesale fuel tax, beginning at 9.5 percent next January, then rising to 15.5 percent by 2018. The tax will result in 25 cents per gallon sent to the government, raising an additional $1.5 billion annually to repair and maintain the state’s roads and bridges. Meanwhile, the state house wants to set a wholesale tax of just 6 percent, delivering $450 million a year.

Though Governor Rick Snyder is on board with Richardville’s proposal, business groups are split over the wholesale tax plan. The state chapter of the National Federation of Independent Business objects to the new tax, believing the tax could not come at a worse time as president Charlie Owen explains:

While we recognize the need for good roads and adequate funding, this is a difficult time for fuel tax increases on Michigan small-business job providers as we watch the price of gasoline approach $4 a gallon. The rising price of fuel and the recent increase in the minimum wage are already putting pressure on Michigan’s small and family-owned businesses. Raising the gas tax would cut more from their bottom line.

Michigan Chamber of Commerce Senior Vice President Jim Holcomb, however, sees no problem with the proposal because of the amount the tax would raise for road projects per annum. The chamber itself urged state lawmakers to solve the problem before facing the possibility of putting the question before the populace on the November 2014 ballot. If passed, the wholesale tax, in tandem with the state’s general sales tax, would give Michigan the title of having the highest fuel taxes in the United States, up from sixth place right now.

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Federal, State Governments Face Budget Shortfalls Amid Increased Fuel Efficiency Mon, 02 Jun 2014 10:00:27 +0000 Chevy Volt Gas Station

As the funding aquifers for road maintenance continues to fall before the efficiency-fueled gas tax drought, federal and state governments are left to ponder how best to make up for the shortfall.

Autoblog reports the easiest solution between the two parties is to raise gas taxes, though doing so could be construed as political suicide at best. Thus, other solutions have come to the surface, including per-mile charges, increased sales taxes, fees for hybrids and EVs, tolling and closing tax loopholes. Without a way to recharge the aquifers, the CAFE drought would drain anywhere from $57 billion to $65 billion between 2012 and 2025; the Beltway Aquifer alone is facing complete drainage by this August.

Whatever the solution, there will be those opposed to boosting funding. In one example, Massachusetts made its first gasoline tax increase — 24 cents — in 20 years, but could see a rollback at the polls come Election Day. Meanwhile, California’s own increase proposal may not even be enacted as the Fed Up at the Pump coalition attempts to mobilize the populace to convince the government not go through with the increase next January, believing the tax will not go into greenhouse-gas reduction programs as well as harm lower-income citizens.

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Analysis: Toyota Could Bring $7.2 Billion To Texas Over Next Decade Fri, 16 May 2014 10:00:26 +0000 Toyota Texas

Toyota’s big move from California to Texas may also bring a big return for Plano, Texas over the next decade, to the tune of $7.2 billion of economic activity.

Bloomberg reports an analysis by Chicago-based Grant Thornton LLP claims the $7.2 billion includes $4.2 billion from payroll taxes, as well as direct and indirect payments, and revenues from sales and property taxes. The analysis was issued on the same day Plano approved a large incentive deal for Toyota, including $6.75 billion in grants and property tax discounts. The state government also approved an incentive package, totaling $40 million.

The report also notes the move and consolidation of Toyota’s operations in the United States to Plano from California, Kentucky and New York, announced last month, is expected to bring as many as 3,650 full-time employees with an average salary of $104,000 by 2018.

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Foxx, Obama Administration Urge Congress To Act On Funding Highway Trust Thu, 15 May 2014 14:00:58 +0000 traffic

With 112,000 infrastructure projects and 700,000 jobs at stake, the Obama administration and Secretary of Transportation Anthony Foxx are both urging Congress find a way to provide funding to the United States Highway Trust Fund before the well goes dry as early as August.

Autoblog reports both parties offered Congress a four-year funding bill that would help raise the needed funds through tolling by individual states, and through closing a loophole on deferred corporate taxes on overseas earnings, which alone would bring $150 billion to the table.

In the Senate, an alternative bill is in the works that would retain funding levels at $105 billion annually with interest for six years, though sourcing the funds would come at a later date. Meanwhile, Republican legislators aren’t keen on raising taxes to fund the trust, especially during the 2014 election season.

As for why the fund is running dry, an 18.4-cent-per-gallon fuel tax issued in the 1990s hasn’t been raised in over 20 years to keep up with increased fuel efficiency among new vehicles, with more increases coming down the CAFE pipeline.

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CA, MD Extend EV/PHEV Credit Programs, Federal Credit Increase May Follow Mon, 05 May 2014 13:00:48 +0000 2014 Honda Fit EV

EV and PHEV owners in California and Maryland will be able to enjoy credits for the foreseeable future for going green, while one representative in Congress wants to up federal tax credits to $10,000.

Autoblog Green reports the success of the California Air Resources Board’s credit program has resulted in a funding expansion of $25 million through the end of the state’s fiscal year in late June. Those seeking rebates on their EV or plug-in purchases will be put on a list, and should receive either their $2,500 EV or $1,500 PHEV credit by the end of September.

Over in Maryland, a provisional bill awaiting Governor Martin O’Malley’s signature will extend the state’s credit program for three years through the end of June 2017. In addition, the maximum credit offered will be increased to $3,000 from $1,000 for PHEV owners.

Finally, U.S. Representative Peter Welch of Vermont is preparing to propose legislation that would boost the federal tax credit from $7,500 to $10,000, which he believes will also make owning an EV more affordable to middle-income consumers. Welch will introduce the legislation upon return to Congress.

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Japanese Auto Market Takes Sales Hit As Consumption Tax Increases Fri, 02 May 2014 10:00:09 +0000 2014 Honda Freed Spike

The Japanese auto market took a hit in sales last month, falling 5.5 percent to 345,226 units as an increased consumption tax of 8 percent took hold in a sign of a slow year in sales.

Bloomberg reports the drop comes at the end of a seven-month-long sales surge of over 783,000 vehicles through March 2014 ahead of the levy issued by Prime Minister Shinzo Abe to help fight the ongoing financial issues plaguing Japan for two decades. As a result, economists believe Q2 2014 will see the biggest retraction since the 2011 Tōhoku earthquake and tsunami.

As for the outgoing month, Toyota and Mazda both posted their lowest number of deliveries since 2011, while Subaru saw a 41 percent drop to a record low number. Meanwhile, Nissan, Suzuki and Mitsubishi all saw gains in April, with Mitsubishi taking the biggest slice of the market at 27 percent.

The consumption tax will be mitigated somewhat for automotive consumers through a 5 percent vehicle-purchase tax, and will give way in 2015 for a 10 percent national sales tax. In the meantime, the next year could play out like it had in 1997, when the tax jumped from 3 percent to 5 percent and auto sales dropped 15 percent with a 21-month decline in the industry.

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Obama Administration Delivers $302 Billion Transportation Funding Proposal Before Congress Wed, 30 Apr 2014 11:00:52 +0000 Syracuse Road Construction - Utah DOT

A $302 billion, four-year plan to fund the U.S. Highway Trust Fund — and, in turn, any road and transit projects on the table during the period — was brought before Congress by the Obama administration through the U.S. Department of Transportation.

Bloomberg Businessweek reports the proposal would add $87 billion on top of what is currently in the trust fund in order to bring much-needed dollars to the many bridges and transit systems seeking rehabilitation while creating “millions of jobs” and, thus, boosting the economy, according to Transportation Secretary Anthony Foxx. The fund, currently subsisting on gasoline and diesel taxes, would be funded by a temporary tax increase on overseas earnings by companies, which is the method proposed by President Barack Obama back in February 2014 in his budget request.

Meanwhile, both houses of Congress are seeking six-year funding proposals, though none have any financial resources to draw upon thus far. Further, lawmakers on both sides of the aisle have claimed there currently are not enough votes to raise the 18.4-cent tax levied per gallon of gasoline to boost the trust fund’s coffers. One such proposal, made in 2012, failed due to being unable to decide upon a funding source, resulting in a two-year stop-gap measure funded through general tax revenue to keep construction projects moving forward.

The proposal also requested an increase in the National Highway Traffic Safety Administration’s maximum fine for automakers who fail to issue recall notices on defective vehicles in a timely manner. The current maximum fine of $35 million would rise to $300 million “to ensure when a violation occurs it is more than a rounding error,” Foxx explained.

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Auto Sales In Turkey Fall 8 Percent In January Thu, 06 Feb 2014 15:39:02 +0000 2014 Renault Fluence

Vehicle sales in Turkey fell 8 percent in January to 32,670 vehicles from the previous high of 35,523 units in January 2013 according to national industry group Otomotiv Distribütörleri Derneği and Automotive News.

Sales for the outgoing year rose 10 percent to 856,378 units from 777,761 in 2012.

ODD predicts sales of 800,000 to 860,000 units moved from the showroom to the road in 2014, but warns a tax hike on passenger vehicles and banking regulations meant to curb the growth of Turkey’s current account deficit would put a dent on the forecast.

Turkey’s market could be in for more losses as a wave of bearishness on the health of emerging markets has become the predominant model of thinking among financial observers. Turkey in particular was expected to be a bright spot in the automotive world once the BRIC markets had matured.


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Foreigners May Pay Toll to Storm the Autobahn Tue, 10 Dec 2013 12:00:10 +0000 autobahn

If you happen to live outside of Germany, you may soon find yourself paying a toll to do your best Burt Reynolds and Dom DeLuise impressions on the Autobahn.

The reason? While residents living in the nine countries surrounding Germany make extensive use of the Autobahn in their travels, the Germans are left footing the bill for maintenance on the famous infrastructure. Since foreigners don’t pay taxes to Germany, Chancellor Angela Merkel’s coalition government has opted to enact a toll aimed at non-German citizens in order to share responsibilities.

The plan has detractors, of course, ranging from Austria’s transport minister Dores Bures threatening to take Germany to the European Court of Justice over the toll, to German auto club ADAC stating that even the potential revenue wouldn’t be enough to cover all the Autobahn’s maintenance costs.

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House Democrat Introduces Bill to Raise Federal Gasoline Tax by 15 Cents Per Gallon Fri, 06 Dec 2013 11:00:48 +0000 htf

Federal taxes on highway fuels haven’t been raised in 20 years. Because of inflation and better fuel economy, the Highway Trust Fund, into which those taxes flow and out of which transportation funding is dispersed, faces a shortfall. Standing next to labor, construction and business leaders, Rep. Earl Blumenauer (D-Ore.) announced that he has introduced legislation that would raise the federal tax on gas to 33.4 cents per gallon and on diesel to 42.8 cents.

“Every credible independent report indicates that we are not meeting the demands of our stressed and decaying infrastructure system — roads, bridges and transit,” Blumenauer said. “Congress hasn’t dealt seriously with the funding issue for 20 years,” the congressman continued. “With inflation and increased fuel efficiency, especially for some types of vehicles, there is no longer a good relationship between what road users pay and how much they benefit. The average motorist is paying about half as much per mile as they did in 1993.”

The American Automobile Association supports the proposal. “Though it would be easier to simply kick the can down the road, today’s proposed legislation takes a necessary step forward in fostering debate on an important issue that many policymakers have been reluctant to address,” said Kathleen Bower, vice president of public affairs for AAA. “The country desperately needs additional funding for infrastructure and, for the moment, there is no better means than the fuel tax. The proposed increase is well overdue and in line with what most experts suggest would be appropriate.”

While states levy their own fuel taxes, about half of transportation funding in the U.S. comes from the federal government. The trust fund no longer brings in enough money to cover its obligations so to fund the federal transportation bill currently in effect, which expires in 2014, Congress had to move more than $50 billion in general tax revenue into the fund. Estimates cited by Rep. Blumenauer say that the trust fund will need $15 billion more each year if Congress decides to keep funding at current levels in the next transportation bill. He said that implementing a $0.15/gal tax over three years would raise approximately $170 billion in the next decade.

If the fuel taxes are not increased, Congress will have to choose between cutting transportation funding at the federal level and moving that tax burden to the states, or funding the Highway Trust Fund with general tax revenue.

The American Society of Civil Engineers said last month that the U.S. needs a $2.7 trillion investment in transportation and other infrastructure by 2020 to keep the United States competitive in the global economy. The Federal Highway Administration has estimated that just to keep our current infrastructure safe, highways and bridges will need more than $70.9 billion worth of repairs.

In the Senate, Barbara Boxer (D-Calif.), chairwoman of the Environment and Public Works Committee, has proposed changing the way taxes are levied on fuel, moving the tax to the wholesale level rather than at the pump.

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The bell tolls over Seattle, but not for most commuters Thu, 17 Oct 2013 10:30:48 +0000 520_sunset510

It would appear as though the price of admission to traverse the longest floating bridge in the world on a daily basis has had quite the impact on commuting patterns in Seattle. A study to be issued by the U.S. Department of Transportation this week – barring another tragicomic display by the powers that be, of course – has uncovered that use of the Governor Albert D. Rosellini Bridge – Evergreen Point (colloquially known as the 520 floating bridge) has gone down by half since tolling began near the end of 2011.

The tolls, ranging from $0 for late-night and early morning travelers, to $5.25 for those rush-hour commuters who prefer to pay the man by mail, have caused 9 out of 10 drivers to find another path to work and play across Lake Washington. The majority of those avoiding the toll have annual incomes of $50,000 and under, while those making $200,000 and above (and are no doubt enjoying the more open road) pay little if any mind to being tolled.

On the upside, more commuters are using mass transit due to the tolls – which were enacted as one of the five DOT demonstration projects under their $1 billion Urban Partnerships Congestion Initiative – with around 45 percent preferring to “ride the wave” than drown in a congestion pricing tsunami.

The information provided by the study will be considered by Olympia, Wash.’s best and brightest this week as they debate on whether to set tolls upon the other two floating bridges (both carrying east- and westbound traffic on I-90) over Lake Washington to help fund the construction of the 520’s replacement, set to open in 2014.

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The Mileage Tax Cometh: The State Giveth, The State Taketh Away Mon, 10 Jun 2013 12:50:57 +0000  


“Hybrid and electric cars are sparing the environment. Critics say they’re hurting the roads,” writes Bloomberg. “The popularity of these fuel-efficient vehicles is being blamed for a drop in gasoline taxes that pay for local highway and bridge maintenance, with three states enacting rules to make up the losses with added fees on the cars and at least five others weighing similar legislation.”

According to Arizona state Senator Steve Farley, a Democrat who wrote a bill to tax electric cars, “the intent is that people who use the roads pay for them. Just because we have somebody who is getting out of doing it because they have an alternative form of fuel, that doesn’t mean they shouldn’t pay for the roads.

State and local gas-tax revenue has declined every year since 2004, falling 7 percent to $37.9 billion in 2010, this according to inflation-adjusted data from the allegedly nonpartisan research group. Institute on Taxation and Economic Policy.

That, however, is not the fault of hybrids and EVs. The market share of hybrids is pretty much stuck at around 3 percent, Hybridcars says. The market share of electric vehicles, which generate no gas tax at all, is close to unobservable, pure EVs and plug-ins together hold half a percent of the American pie.

What is true is that sales-weighted MPG of all new automobiles bought and sold in the U.S. os steadily going up. In October 2007, the index stood at 24.7 MPG. In May, all cars sold had an average CAFE rating of 30 MPG.

This is declared national policy, and automakers are working hard to meet the policy. State tax revenue becomes collateral damage.

Farley’s proposed anti-EV tax is a mileage tax. His bill wants one cent per mile driven on Arizona highways by “a vehicle that is propelled by a motor that is powered by electrical energy from rechargeable batteries or another source on the vehicle or from an external source in, on or above the street and that is not capable of being powered by motor vehicle fuel or use fuel.”

Of course, it is highly unfair to levy a mileage tax on a plug-in only. When the systems are in place to track the handful of plug-in in Arizona, and which most likely will cost more than the tax it generates, a mileage tax for all cars is sure to follow.

In New Jersey, Democratic State Senator Jim Whelan proposed a similar bill to tax cars by mile driven. The cars would be tracked by GPS. Facing criticism, he now proposes that “owners of alternative-fuel vehicles would be charged an annual fee – about $50 per year, though that is not final” as The Atlantic City Press says.

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How To Avoid Brazilian Car Taxes: Build A Factory. Or A Few Sat, 12 Nov 2011 15:19:31 +0000

The Brazilian government must have borrowed several chapters from Vladimir Putin’s playbook on industrial policy. Reuters has it that the Brazilians are using the same strong-arm tactic as Russia: Invest heavily in-country and steep taxes on imported cars will go away. Don’t invest in Brazil and kiss your bunda adeus.

Brazil’s government had hiked the sales  tax on motor vehicles from 7 percent to 25 percent (depending on horsepower)  to between 37 percent and 55 percent. This does not apply to cars with at least 65 percent domestic content. The law, originally planned to go into effect in October, was delayed by the supreme court until December, ruling that a law needs 90 days to take effect.

Now Brazilian media reports that foreign automakers committed to installing factories in Brazil can also get around the tax, even on cars that are imported.

Many carmakers, from China’s JAC Motors to luxury brands BMW and Land Rover have discussed or announced new factories in Brazil.  Analysts see Brazil to become the world’s third largest car  market by 2015, kicking Japan off the podium. Speaking of Japan, its government plans to report Brazil to the WTO, Brazilian press says (via Bloomberg).



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Washington: More Anti-Camera Initiatives to Come Thu, 10 Nov 2011 15:11:01 +0000

Washington State ballot initiative guru Tim Eyman vowed Wednesday to put even more pressure on municipalities he sees as dependent on automated ticketing revenue. Eyman is feeling good after voters on Tuesday rejected cameras by comfortable margins in three of three contests on Tuesday. Larger jurisdictions are now in his sights.

“For us, it’s full steam ahead,” Eyman told TheNewspaper. “I’m gung-ho to do a couple more cities and keep the ball rolling. I’ve never found a more effective way to lobby the legislature than to say, ‘You either do it, or we’re just going to pick you off one city at a time.’”

Last year, 71 percent of voters in Mukilteo approved a measure outlawing cameras. On Tuesday, 65 percent of the voters in Bellingham, 65 percent in Monroe and 59 percent in Longview felt the same way. Local politicians in some jurisdictions are starting to realize the public is not on their side. Last week, Redmond’s city council voted 7-0 to allow its red light camera contract with American Traffic Solutions (ATS) to expire on January 31, 2012.

“Collision data indicate that the impact of traffic safety cameras on collisions in Redmond is inconclusive,” Police Chief Ron Gibson wrote in a memo to the city council.

Voters in Redmond had submitted a valid petition to order the issue placed on the ballot earlier this year, but ATS convinced a judge to block citizens from petitioning their government, even in an advisory-only vote. Lawsuits on the issue remain pending from the county court level all the way up to the state supreme court. The ongoing litigation is racking up substantial legal bills for the municipalities that decided to fight the citizens’ initiatives in court. In Longview, legal costs have nearly exhausted the city’s share of the profit generated by cameras.

“If I don’t get a Christmas card from Stoel Rives law firm, which is representing several of the cities, I’m going to be hurt,” Eyman said.

In most cases, efforts to block initiatives have backfired showing an unseemly coordination between the private vendors and municipalities. Groups like Campaign for Liberty, which co-sponsored the anti-camera initiatives, are using the votes to convince lawmakers in Olympia to repeal the authorization they gave to photo enforcement.

“There’s just no other way to uncover how sleazy the companies are and how unpopular the cameras are than doing these citizens’ initiatives,” Eyman said.

An ATS executive lost his job after he was caught acting as a “sock puppet” posting pro-camera comments on online forums as if he were a local resident. In Lynnwood, emails were released showing police officials sought to do favors for ATS in hopes of landing a lucrative job with the firm. City councilmen like Ted Heikel, the primary defender of cameras in Lynnwood, lost his seat Tuesday.

“If you’re a politician in bed with the red light camera companies, it’s bad for your political career,” Eyman said. “It’s making all the pro-camera politicians look bad.”


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Chicago, Illinois Speed Camera Plan Could Dwarf Red Light Revenue Tue, 08 Nov 2011 15:18:21 +0000

Sixty-one million dollars a year is a lot of money. That is the revenue Chicago’s red light camera program program generated in 2010. Based on reports from the Chicago Department of Transportation (CDOT), a proposed speed camera enforcement program being pushed by Mayor Rahm Emanuel (D) would make the city’s red light camera program look penny ante in comparison.

The Expired Meter obtained the results of three studies conducted by CDOT over the past few years which shed light on how lucrative the speed camera business could be for Chicago. Data from these reports seem to indicate that revenue from speed cameras could generate hundreds of millions of dollars in fines for a desperate, cash-strapped city.

Emanuel is pushing legislation through the Illinois General Assembly at breakneck speed, which, if passed, would allow Chicago to utilize its red light cameras to also issue $100 speeding ticket to vehicle owners accused of exceeding the speed limit by more than 5 MPH in designated “safety zones” within an eighth of a mile of schools, parks and colleges.

As the basis for the automated speed camera program, the mayor along with Chicago Police Superintendent Garry McCarthy and Chicago Public Schools CEO Jean-Claude Brizard all pointed to a study which claimed over 25 percent of all vehicles were exceeding the speed limit at seven intersections.

Mayor Emanuel says “I hope I get no revenue from this.” CDOT chief Gabe Klein claims the goal is just to get drivers to slow down. Whether or not pedestrian safety is improved and the lives of children are saved may be unanswerable questions. However, if the data from these speed enforcement studies are to be believed, one thing that can be determined is that speed cameras will generate significant revenue for the City of Chicago.

CDOT’s Spring Speed Enforcement Study

CDOT conducted a study of seven approaches at intersections with red light cameras to document the number of cars speeding through those locations over a two month period this past spring from April 1 through May 31st.

An approach by definition is just one leg of an intersection. Most intersections have four approaches, one for each direction. Although as Chicago drivers know, the city has a handful of six-approach intersections. Typically, intersections with red light camera enforcement have at least two approaches with cameras and in rare occasions three.

The study monitored the speed of vehicles only during weekdays from 6am to 11am and then from noon until 4pm. During the nine hours per day over the course of 43 days, cameras recorded 1,418,797 vehicles passing through the seven approaches.

While the city’s report said nearly 26 percent of all vehicles were exceeding the speed limit, only 9 percent — or 131,034 vehicles — exceeded it by the 5 MPH threshold. In other words, if speed cameras were enforcing during this two-month period, 131,034 drivers would have been issued tickets totaling $13.1 million in fines.

Revenue Could Reach Hundreds Of Millions

While a hefty amount of cash, the revenue picture gets even brighter for Chicago when you apply the currently proposed hours and days of enforcement to the city’s study. The current version of the speed enforcement bill would allow Chicago to have speed camera enforcement seven days a week from 6am until midnight — 18 hours a day — not the paltry nine hours during weekdays the study covered.

Extrapolating the numbers provided in CDOT’s study, based on 48 violations per hour per approach, each camera would produce 864 violations a day or 25,920 citations and potential fines of $2.6 million for the first month. All seven cameras would produce an estimated 181,440 speeding citations or $18 million for that month.

Projecting future revenues is slightly more challenging, as estimates must take into consideration the effect of camera enforcement on driver behavior. The assumption is motorists would alter behavior with the knowledge that enforcement is occurring. Of course, after a few $100 tickets in the mail, people will learn the camera locations, brake before passing them, and violations will decrease over time — but never completely disappear.

Using CDOT’s red light camera violations in 2010 as a model, monthly totals for red light running can be seen to be dropping by an average of 5.3 percent per month for the last seven months of that year after CDOT stopped adding more cameras to the program.

Applying a regression to the mean to the projected initial numbers, the first twelve months of enforcement where fines would be issued, from just these seven locations would still produce 1,503,311 speed violations or $150 million in fines — a dollar amount that far exceeds the total revenue generated by the all 382 red light cameras every year. The numbers were discounted by 6 percent every month as violations will fall over time.

As further context, the city issued 767,603 total red light camera citations in 2010, close to half of what these the seven cameras in CDOT’s study are estimated to produce. In even broader terms, CDOT confirms 79 intersections or 158 cameras would fall within a school or park “safety zone” to qualify for speed enforcement under the current bill.

Without more traffic data at the 79 intersections in question, it would be difficult to produce an accurate estimate of what kind of revenue speed cameras could produce. But based on Chicago’s own numbers, it is safe to say hundreds of millions of dollars could be generated per year by a speed enforcement program of this magnitude.

“It’s blatantly about revenue,” said camera opponent Brian Costin. “They’re using kids to generate revenue.”

Costin, who works for the Illinois Policy Institute, helped bring down suburban Schaumburg’s red light camera program a few years ago. He believes Chicago has a questionable record when it comes to traffic safety and is worried how far the program would expand.

“I am gravely concerned when the city of Chicago says they’re doing something to improve traffic safety,” says Costin. “Their track record it horrible. You can tell it’s not really about safety when you look at the hours of operation (proposed hours of enforcement) are not during just school hours but when most people drive to maximize revenue.”

2006 Study Shows Speeding Violations Would Far Outpace red light camera Tickets

CDOT did two previous studies back in 2006 and 2008 where they found that speeding violations documented by red light cameras far exceeded red light violations. In 2006, one red light camera at the intersection of Kedzie and 79th documented speeding seven days a week, 24 hours a day for a three month period from January 10th through April 9th. Over that three month period, the camera issued 398 red light camera violations, but caught 13,995 drivers exceeding the speed limit according to the report from CDOT. That breaks down to 35 speeding violations for every one red light camera violation. This report did not break down speeding incidents by how fast the vehicle exceeded the speed limit, so it is impossible to tell how many vehicles exceeded the 5 MPH threshold to earn a $100 fine.

Another study done in 2008 monitored two Southside intersections on Western Ave. with speed cameras between September 30th and October 25, documenting speeding from 6am to 6pm. This study paints an even uglier picture as 23 percent of the 85,231 vehicles detected over the course of the study, or 19,660 of drivers were driving 5 MPH over the speed limit.

While the debate on whether a speed enforcement program will improve pedestrian safety will continue, it’s safe to say Mayor Emanuel could tap a revenue stream that could speed the city out of debt. Multiple calls and emails to CDOT for comment over the past week by The Expired Meter were not returned.

Detailed coverage of Chicago motoring issues can be found at The Expired Meter.


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Argentina: Want To Sell Porsches? Export Our Wine And Olives Fri, 04 Nov 2011 15:20:36 +0000

With a 35% import tax on new cars, Argentina is already a touch market for foreign brands seeking to bring cars into the country. But the Argentinean government has just made it  little bit harder by demanding that importers export an equal amount of Argentina-made goods for every car imported. As a result, Bloomberg reports that Porsche’s importer is exporting Malbec wines and olives, Mitsubishi’s importer is getting into the peanut export game, and Subaru’s representative is shipping chicken feed to Chile. BMW, which has had recent difficulties importing into Argentina, is focusing on its core business, exporting auto parts and upholstery… and a little processed rice to make up the difference. But why are these major manufacturers getting into all kinds of strange side businesses just because Argentina wants to improve its trade balance and foreign currency reserves? Simple: Argentina is South America’s second-largest economy, and it’s been growing at over 5% per year since 2007 (i.e. when other markets were shrinking). So if the government wants imports balanced with exports, well, Porsche’s importer is just going to have to get into the wine business, isn’t he?

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Georgia HOT Lanes Create Congestion, Disappointment Wed, 19 Oct 2011 14:03:39 +0000

Georgia’s introduction of high occupancy toll (HOT) lanes on Interstate 85 at the beginning of the month has already turned into a public relations disaster. During rush hour, motorists found themselves stranded in the general purpose lanes as the adjacent HOT lane — constructed and maintained with their tax dollars — were essentially unused. Drivers balked at paying the stiff $5.40 entrance tax for permission to enter, leaving the existing lane space to go to waste. Governor Nathan Deal (R) intervened swiftly on October 6 to order the State Road and Tollway Authority (SRTA) to lower the cost of using the toll lane.

“Looking at what we’ve learned from our first four work days with the HOT lanes, I’ve asked SRTA to improve utilization of the express lanes,” Deal said in a statement. “In the short term, the toll rate will lower — starting with Thursday afternoon’s commute — but the effective rate will continue to change to regulate speed and volume.”

The HOT lanes idea was hailed from the start as an important advance in the region’s transportation network. Using $110 million in federal gas tax dollars, a system of gantries was set up requiring drivers to install an electronic transponder, called the Peach Pass, if they wished to pay to use a 15-mile stretch of the freeway that previously had been set aside as a high-occupancy vehicle (HOV), free for the use of anyone carrying an extra passenger in his vehicle. The change to the HOT format was hailed as a proven concept.

“The opening of the I-85 Express Lanes will represent a new era in transportation innovation,” SRTA Executive Director Gena L. Evans, said on September 16.

After the project actually opened for business, motorist Howard Rodgers quickly racked up more than 1500 electronic and hardcopy signatures on a petition calling for a halt to the HOT lanes.

“By removing the existing HOV lane for use as a toll lane the state has created daily traffic jams and backlogs causing greater pollution, increased travel times, and an extra tax on the citizens of Gwinnett County and points north during times of economic decline,” the petition states. “The adjustable toll system amounts to a monopoly on the travel lane requiring customer to pay a higher surcharge (price gouging) for the ability to arrive to or from work in a timely manner.”

Deal forced state officials to ask the Federal Highway Administration for permission to allow vehicles with two, as opposed to three, people on board to use the express lanes for free. I-85 is not the only HOT lane to fail. In Washington State, the State Route 167 HOT lanes are on their third year in operation. According to the third-quarter financial results, it cost $173,939 more in toll collection expenses to operate the lanes than was generated in revenue in fiscal 2011.


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Report Knocks “Big Battery” Plug-In Subsidies, Will The DOE Notice? Wed, 28 Sep 2011 16:42:11 +0000

The main tool for the government’s crusade to get one million plug-in cars on the road by 2015 is the “Qualified Plug-In Electric Vehicle Tax Credit,” a credit that returns between $2,500 and $7,500 to purchasers of a qualifying vehicle. To qualify for the minimum $2,500 credit, a vehicle must have a traction battery with a minimum of four kW/h, and the credit adds an additional $417 in credits for every kW/h above the minimum. Why? Well, you might think that it’s because the DOE has done its research and determined that larger battery packs deliver more social benefits… at least until the 16kW/h limit (the exact size of the Chevy Volt’s battery), where the credit tops out at $7,500. But according to new research by Carnegie Mellon’s Jeremy Michalek, that basic assumption doesn’t appear to be true at all. In fact, his latest paper argues that the government would actually be better off subsidizing smaller, not larger, battery packs.

In an in-depth evaluation [PDF] of plug-in hybrids (PHEVs), large-battery EVs, smaller-battery EVs, Hybrids and conventional cars, Michalek and his colleagues found that

Current subsidies intended to encourage sales of plug-in vehicles with large capacity battery packs exceed our externality estimates considerably, and taxes that optimally correct for externality damages would not close the gap in ownership cost. In contrast, HEVs and PHEVs with small battery packs reduce externality damages at low (or no) additional cost over their lifetime. Although large battery packs allow vehicles to travel longer distances using electricity instead of gasoline, large packs are more expensive, heavier, and more emissions intensive to produce, with lower utilization factors, greater charging infrastructure requirements, and life-cycle implications that are more sensitive to uncertain, time-sensitive, and location-specific factors. To reduce air emission and oil dependency impacts from passenger vehicles, strategies to promote adoption of HEVs and PHEVs with small battery packs offer more social benefits per dollar spent.

Back in 2009, Michalek made the core of this argument in an interview with Spectrum Magazine

Spectrum: So if you have to make a choice—big or small batteries for plug-in hybrids—which is best?

JM: From what we’ve found, if you have a higher-capacity plug-in, something like the Volt, it could lower greenhouse-gas emissions for some drivers, but that comes at a cost that wouldn’t be paid back by fuel savings. A $100-a-ton carbon tax doesn’t even do it.

On the other hand, a driver who is able to charge frequently would do well to buy a small-capacity plug-in. This person might not care at all about the environment or about the nation’s dependence on foreign oil, yet he or she would still benefit from buying such a vehicle.

Places where the economic, environmental, and national-security objectives are all well aligned—that’s where you’d want to break in a new technology. I would say to carmakers, go after those people. And to consumers: Buy small, charge often.

The Volt would be the poster-boy for Michalek’s critique: it has the minimum battery size needed to claim the full $7,500 tax credit, and yet its creators admit that it was developed for a consumer use profile rather than ultimate efficiency. Whether the Volt was developed to exactly hit the government’s kW/h credit limit, or if the limit was tailored to the Volt isn’t clear… but what is clear is that incentivizing smaller batteries will do more per dollar spent to displace oil. As Michalek tells Bloomberg

It’s not that large battery packs are bad, it’s that they are not providing as many benefits per dollar. Ordinary hybrids increase fuel economy substantially, and the incremental cost of those systems is getting relatively small.

Meanwhile, the timing of this report is very interesting: Reuters reports that the DOE is about to reveal its own research into EV incentives, and will be pushing to spend more money on Obama’s goal of putting a million EVs on the road.

Energy Secretary Steven Chu is due to unveil the results of a major review of research spending on Tuesday, one that could shift research dollars away from clean electricity and biofuels toward electric vehicles and modernizing the power grid.

The first-ever “Quadrennial Technology Review” prioritizes research that can be commercialized within 10 years, and research that could make a substantial dent in oil use and greenhouse gas production in the next two decades.

But will the DOE’s renewed push for EV proliferation reflect the sober analysis of scientists like Michelak, or will they be more wink-nudge games, in which the industry sets the policy agenda? After all, there are already plenty of reasons for the industry to keep electrified automobiles in a high-price ghetto, and the government has thus far been more than happy to play along with that game. But if this country is serious about reducing oil dependence, plug-in technology needs to be proliferated in the most efficient way possible. That means fewer handouts to luxury EV firms like Fisker and Tesla, and a more rational approach to consumer subsidies, as outlined by Michelak.

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Massachusetts: Supreme Court Approves Charging Innocent Ticket Recipients Thu, 22 Sep 2011 14:31:25 +0000

Motorists issued a traffic ticket in Massachusetts will have to pay money to the state whether or not they committed the alleged crime. According to a state supreme court ruling handed down yesterday, fees are to be imposed even on those found completely innocent. The high court saw no injustice in collecting $70 from Ralph C. Sullivan after he successfully fought a $100 ticket for failure to stay within a marked lane.

Bay State drivers given speeding tickets and other moving violations have twenty days either to pay up or make a non-refundable $20 payment to appeal to a clerk-magistrate. After that, further challenge to a district court judge can be had for a non-refundable payment of $50. Sullivan argued that motorists were being forced to pay “fees” not assessed on other types of violations, including drug possession. He argued this was a violation of the Constitution’s Equal Protection clause, but the high court justices found this to be reasonable.

“We conclude that there is a rational basis for requiring those cited for a noncriminal motor vehicle infraction alone to pay a filing fee and not requiring a filing fee for those contesting other types of civil violations,” Justice Ralph D. Gants wrote for the court. “Where the legislature provides greater process that imposes greater demands on the resources of the District Court, it is rational for the legislature to impose filing fees, waivable where a litigant is indigent, to offset part of the additional cost of these judicial proceedings.”

The court insisted that allowing a hearing before a clerk-magistrate instead of an assistant clerk, as well as allowing a de novo hearing before a judge constituted benefits that justified the cost. Last year, the fees for the clerk-magistrate hearings generated $3,678,620 in revenue for the courts. Although Sullivan raised the issue of due process during oral argument, the court would not rule on the merits of that issue.

“I am disappointed that the SJC did not consider my due process argument,” Sullivan told TheNewspaper. “I suppose that some other driver who gets charged with a moving violation will need to consider doing that. At least this decision will give them a blueprint for a focused due process argument.”

Sullivan, an attorney, is not planning on further appeal to the US Supreme Court.

“While the decision did not go my way, I am safe in the knowledge that I gave it my best shot,” Sullivan said. “I took on this case because I felt that it was the right thing to do.”

Source: Salem Police Department v. Sullivan (Massachusetts Supreme Judicial Court, 9/21/2011)


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Arizona: Federal Judge Overrules Legislature on Transit Subsidies Thu, 08 Sep 2011 14:32:18 +0000

Arizona must subsidize those who ride on buses, vans and light rail, regardless of the desire of state lawmakers or voters to do otherwise. US District Court Judge David G. Campbell on Friday overturned a state law enacted in March last year to curtail excessive spending by slashing such subsidies. The legislature canceled the Local Transportation Assistance Fund, which had doled out $127 million in taxpayer cash since 1998 to various mass transit programs using funds from the Powerball lottery.

A group of left-wing activists in Maricopa County filed a “citizens’ lawsuit” under the Clean Air Act (CAA) to get that money back. The federal law allowing such suits also requires certain areas of the country file “state implementation plans” (SIP) outlining what steps they would take to meet stringent air quality standards. These plans must be approved by the Environmental Protection Agency (EPA) which allows a narrow set of mitigation strategies that give a high priority to so-called “mass transit” programs, even when these programs do not actually move a large number of people.

For example, Arizona funnels public money into privately run van service companies, counties, municipalities and Indian tribes under the federally authorized Section 5310 mass transit program. The grants provide capital funds for the purchase of vehicles that are used mostly to provide subsidized transport for people over the age of sixty. The University of Arizona received one of these grants through Pima County to buy three golf carts in 2008. Bullhead City offers complimentary paratransit service with 15 percent of its senior citizen passengers boarding at the Laughlin Casino Resort.

“Defendants assert that this lawsuit has no significance to air quality or transit services in the Phoenix area,” Judge Campbell wrote. “But the advisability of requiring lottery funding for transit, or other policy considerations that went into the SIP, are not for this court to decide.”

Campbell’s order effectively nullified House Bill 2012, which had repealed the Local Transportation Assistance Fund. He also ordered the state to provide up to $18 million in funding each year to such programs.

“This circuit has made clear that provisions of an EPA-approved SIP are federally enforceable in district court through the CAA’s citizen suit provision,” Campbell ruled. “Absent prior approval from the EPA, the Arizona legislature lacked authority to repeal the portions of A.R.S. Section 5-522(A) that are included in the SIP, and that the legislature’s attempt to do so therefore is null and void and the lottery funding requirement included in the SIP remains in full force and effect.”

A copy of the ruling is available in a 90k PDF file at the source link below. Pictured: a van purchased by the Apache Junction Parks and Recreation department using LTAF funding.

Source: PDF File Paisley v. Darwin (US District Court, Arizona, 9/2/2011)


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Desperate Photo Enforcement Firms Sue Cities Fri, 05 Aug 2011 14:01:14 +0000

Companies that operate red light cameras and speed cameras are facing increasing opposition across the country. In response, the firms have adopted a strategy of suing cities that have second thoughts about continuing to use cameras in their community. They have also been going after their own customers to collect as much revenue as possible.

On December 1, Redflex filed suit against Tempe, Arizona in Maricopa county Superior Court claiming the city owed $1.3 million in per-ticket fees for each driver mailed a photo ticket who decided to go to traffic school. The city claims it only collected $1.8 million in revenue from the program, mostly because last year’s payment rate was just 31 percent. Drivers realize in increasing numbers that tickets in the state can be ignored unless they are properly served.

City officials reacted angrily to the Redflex move. On July 19, the photo ticketing operation was shutdown after a 4-3 city council vote earlier that month refused to renew the contract with Redflex. The company explained its hardball tactics in a February 25 report to shareholders on the Australian Securities Exchange.

“As a result of the macro economic challenges facing the US market throughout 2010, and the current politically challenging times, new contract executions have declined,” the Redflex report stated. “This financial year, Redflex has focused its efforts on strengthening its business model through tighter contract language, (and) more aggressive collection efforts in key markets.”

The main competitor to Redflex, American Traffic Solutions (ATS), has likewise been feeling the marketplace squeeze. Most recently, Los Angeles, California just terminated its red light camera program, costing the company millions. ATS lashed out at San Bernardino after its city council voted unanimously in March to cancel its photo ticketing contract with ATS before the 2014 expiration date. In an April letter, Police Chief Keith L. Kilmer offered to pay ATS CEO James Tuton $175,000 in accordance with Section 4.4 of the contract governing cancellation fees. ATS insisted that it will not allow San Bernardino to get out of the contract.

“The termination/cancellation fee is inapplicable here because Section 4.4 specifically provides for a termination and cancellation fee only ‘in the event of termination due to a breach by the municipality,’” ATS attorney Vanessa Soriano Power wrote in a May 4 letter to the city. “Thus, Section 4.4 applies only where ATS elects to terminate the agreement.”

ATS insists that San Bernardino must pay $1,896,202.05 to end photo ticketing.


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California Cuts Green Car Incentive In Half Sat, 23 Jul 2011 17:31:39 +0000

California has backed up its strict emissions standards for years now with a $5,000 tax credit for electric, hybrid and fuel cell vehicles, which when combined with a $7,000 federal tax credit can often make those vehicles nearly as affordable as “regular” cars. But, reports Automotive News [sub], that state credit has fallen victim to California’s budget woes and oversubscription, and has been cut in half from $5,000 to $2,500. According to the report:

high demand exhausted the program’s funding last month. The Los Angeles Times reported Thursday that about 500 consumers who bought electric cars such as the Nissan Leaf or Tesla Roadster are on a waiting list and will collect the $2,500 rebate.

To deal with growing demand, the pool of money to fund the rebates was increased to between $15 million and $21 million for CARB’s current fiscal year ending June 30, 2012, according to CARB’s announcement. A total of $11.1 million was allocated in the program’s first two years, according to CARB spokeswoman Mary Fricke.

The increased cash pool and lowered rebate amount are aimed at making the incentive available to more consumers, according to CARB’s Web site. The changes are projected to fund about 6,000 rebates for consumers who apply for the program on a first-come basis, Fricke said.

Now California “green car” intenders not only get a reduced tax credit, but they also don’t get free access to the HOV lane anymore. It’s almost as if California wants “green” vehicles to succeed or fail on their own terms…

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