Vehicle Mileage Tax

Mileage Tax Suggested to Replace Gasoline Tax

New way sought to have drivers to pay for roads in era of better fuel economy, emergence of electric vehicles

August 1, 2010

The Columbus Dispatch - For decades, paying for roads has been fairly straightforward. Motorists pay at the pump through gasoline taxes. It's more or less fair, too: The more you drive, the more you pay.

But more and more, people involved in transportation planning and construction say that model is breaking down as many vehicles get better gas mileage or don't use gasoline.

They say that the federal and state governments eventually should switch to a system that charges a tax based on how many miles you drive, not how many gallons you consume.

As gasoline-tax revenue stagnates, the idea is to institute a true user fee tied to miles driven.

It was a major recommendation in 2009 when a 60-member panel met to discuss Ohio's transportation future. Gov. Ted Strickland hasn't taken up the idea, said Scott Varner, a spokesman for the Ohio Department of Transportation, but it hasn't been dismissed, either.

"There are a lot of examples around the country about how it can be done," Varner said. "But there are still a lot of questions about it."

In a time when global-positioning systems can track exactly where you go, how much would the government know about where or how far you drive? Could cities demand a share for the mileage you drive on their streets? Could it cost more to drive at rush hour? Would collection be as seamless as the gasoline tax?

The Oregon Department of Transportation tested replacing the state's gasoline tax with a vehicle-miles-traveled, or VMT, tax.

Readers on gas pumps accessed computers mounted in volunteer participants' vehicles to download information about how many miles the vehicle had traveled in different tax zones. There was one charge for miles traveled in a zone in and near Portland and a lower rate for miles driven in other parts of the state.

The system didn't keep track of the actual route taken or when the trip was made.

The main problem for those who build and maintain roads is that gas-tax collections have dropped off or stagnated. The poor economy means people are driving less, and vehicles are getting better gas mileage.

Since 2008, Congress has added billions of dollars in non-gas-tax money to transportation funding to make up for shortfalls in gas-tax revenue. In 2009, the federal stimulus also covered the gap.

In the short run, Congress should increase the gas tax, said Chester Jourdan, executive director of the Mid-Ohio Regional Planning Commission, which helps plan transportation projects in central Ohio.

"The Congressional Budget Office has said there's a $234 billion funding gap that exists between the current funding levels and the needs that are out there," Jourdan said. "There's this big gap, and currently there's no real viable means other than raising the gas tax to fill that gap."

A VMT tax is an alternative that should be considered for five to seven years out, he said.

We try to have it both ways: We have a national policy of increasing fuel economy and moving to non-gasoline vehicles, and a system for funding highways that depends on fuel consumption.

"Every major manufacturer will have an electric vehicle out by 2012," he said. "These things will be in our communities. We'll have alternative fuel sources like (compressed natural gas) that aren't tied to how we fund highways."

The key is to replace the gas tax, not add to it, said Matt Mayer, president of the Buckeye Institute, a conservative research group in Columbus.

Ohioans pay an 18.4-cent-per-gallon federal gasoline tax and a 28-cent-per-gallon state gasoline tax.

"We have a federal and state gas tax," Mayer said. "Do the other ones get eliminated? Is part of it to drive people out of their cars and onto this mythic train we're going to build?"

He said he hasn't studied mileage taxes, but he has looked at what's happening with gasoline taxes.

"There's an issue of declining fuel consumption because of greater mileage and how that impacts our ability to fund structures," Mayer said.

Uncle Sam Eyes Vehicle Tracking Tax

September 14, 2009

The Truth About Cars - A Member of Congress proposes to use taxpayer money to fund the development of technology to track motorists as part of a new form of taxation. US Representative Earl Blumenauer (D-Oregon) introduced H.R. 3311 earlier this year to appropriate $154,500,000 for research and study into the transition to a per-mile vehicle tax system.

The “Road User Fee Pilot Project” would be administered by the US Treasury Department. This agency in turn would issue millions in taxpayer-backed grants to well-connected commercial manufacturers of tolling equipment to help develop the required technology. Within eighteen months of the measure’s passage, the department would file an initial report outlining the best methods for adopting the new federal transportation tax.

“Oregon has successfully tested a Vehicle Miles Traveled (VMT) fee, and it is time to expand and test the VMT program across the country,” Blumenauer said in a statement on the bill’s introduction. “A VMT system can better assess fees based on use of our roads and bridges, as well as during times of peak congestion, than a fee based on fuel consumption. It is time to get creative and find smart ways to rebuild and renew America’s deteriorating infrastructure.”

In 2006, the Oregon Department of Transportation completed its own study of how to collect revenue from motorists with a new form of tax that, like the existing fuel excise tax, imposes a greater charge on drivers the more that they drive. The pilot project’s final report summed up the need for a VMT tax.

“Unfortunately, there is a growing perception among members of the public and legislators that fuel taxes have little to do with road programs and therefore should be considered ‘just another form of taxation,’” the March 2006 report stated. “By itself, this situation appears to be preventing any increases in fuel tax rates from being put into effect.”

The money diverted from the fuel excise tax on non-road related projects must be made up for with a brand new VMT tax, the report argued. Merely indexing the gas tax to inflation or improvements in fleet gas mileage was rejected as “imprecise.” Instead, the report urged a mandate for all drivers to install GPS tracking devices that would report driving habits to roadside Radio Frequency Identification (RFID) scanning devices.

Blumenauer is a long-time advocate of bicycling and mass transit in Congress. Many of his largest campaign donors stand to benefit from his newly introduced legislation. Honeywell International, for example, is a major manufacturer RFID equipment. The company also happens to be the second biggest contributor in the current cycle to Blumenauer’s Political Action Committee (PAC), the Committee for a Livable Future. Another top-ten donor, Accenture, is a specialist in the video tolling field.

H.R. 3311 awaits a hearing in the House Ways and Means Committee. A copy of the bill is available in a 170k PDF file.