Dispelling the myths of mileage-based user fees
Oregon is getting set to begin a new pilot of mileage-based user fees known as the Road User Charge Pilot Program. As part of that effort, ODOT staff is talking to stakeholders about why a mileage-based fee is needed in an era of increasing fuel efficiency and how the system will work. Here are a few of the frequently asked questions we’ve been hearing.
Can’t you just increase the gas tax to pay for transportation?
The gas tax is a great way to pay for transportation, but it’s being challenged by new fuel efficiency standards that will require the average new vehicle to get about 50 miles to the gallon by 2025. Raising the gas tax repeatedly to cover this shrinking revenue base is probably not politically feasible. Even if it were feasible, the gas tax won’t work well when we have tens of thousands of non-gasoline vehicles on the road because they won’t be paying anything for use of the roads. What’s more, increasing the gas tax raises issues of basic fairness. Since most lower-income families can’t afford new fuel efficient vehicles, they rely on buying used vehicles in the secondary market. With the well-off buying highly-efficient new vehicles and lower-income people buying lower-efficiency used vehicles, the burden of escalating gas taxes would fall primarily on those who can afford it the least.
Won’t this violate privacy because the government will be tracking vehicle movements?
A few years back ODOT tested a collection system for mileage-based charges that required installation of a GPS receiver in a vehicle. The GPS unit counted (rather than tracked) miles driven in state versus out of state so that people wouldn’t have to pay for miles driven out of state. The GPS unit did not collect, store, or transmit any data on vehicle location or movement. Nonetheless, the public expressed concerns about privacy, and ODOT has changed its approach in response.
ODOT’s new concept for mileage-based user fees will provide motorists options and not require the use of GPS. Some motorists could use an app on the smart phone they’re already using, while others may choose a flat annual fee or an odometer reporter used in the insurance industry that contains no GPS technology. Still others may choose a GPS-based navigation system that can tell when they’re not in state or are traveling off public roads so they don’t have to pay Oregon taxes for those miles.
Won’t a mileage-based user fee disincentivize buying fuel efficient cars?
In a time of high gas prices, when fuel taxes are just a small part of the cost of a gallon of gas, that won’t be a major effect: driving a mile in a Prius will still be much cheaper than driving a mile in a Hummer, even with a mileage charge that will probably be somewhere around a penny and a half to match the current gas tax.
Consider the example of a Prius that gets 48 miles to the gallon and an SUV that gets 15. If gas is selling for $3.30 a gallon (including the 30 cent state gas tax), the Prius will pay 6.9 cents per mile, and the SUV will pay 22 cents per mile in fuel costs and user fees. Taking out the gas tax and adding in a 1.5 cent per mile fee, the Prius will pay 7.8 cents for every mile it drives. Because it’s unlikely that lower mileage vehicles will transition to a VMT fee anytime soon, the SUV will remain on the gas tax and continue to pay 22 cents for every mile driven—nearly triple what the Prius pays, providing plenty of monetary incentive to buy a fuel efficient vehicle.
Won’t a mileage-based fee hit rural drivers harder because they have to drive longer distances?
Those who drive long distances—including both rural drivers and many urban residents who commute long distances-- already pay the gas tax, so they are already paying more for driving longer distances. Whether individual drivers pay more or less under a mileage-based user fee will depend not on the distance they drive but on the vehicle they drive. Those who drive a vehicle with average fuel efficiency will pay the same amount they do now for each mile, while others will pay slightly more or less to use the roads. ODOT has hired a firm to conduct an analysis of this concern about rural drivers and will have results before the Oregon Legislature considers whether to approve a mileage-based user fee.
Won’t a new tax require a large new bureaucracy?
ODOT and the Road User Fee Task Force have developed a concept for an “open system” that will offer people the ability to choose from various options to count, report, and pay for the miles they have driven. This system will rely on the private sector to provide technology, collect data, and process payments, minimizing the need to create a large state bureaucracy.