Turns out a gas tax isn’t effective on vehicles that don’t use gas, or are very fuel efficient. That’s the problem lawmakers across the country are reckoning with right now, and many states are trying to address with vehicle miles-traveled (VMT) taxes in an attempt to bolster funding for infrastructure repair.
Currently, there’s an 18.4-cent federal tax on every gallon of gas. That amount hasn’t been raised since 1993, and doesn’t include states’ own taxes.
The VMT proposal appears to be gaining favor in the nation’s capital, according to stories published late last week by Bloomberg and the Washington Post. U.S. Transportation Secretary Pete Buttigieg reflected on the value of such a system in late February during an American Association of State Highway and Transportation Officials virtual meeting.
Buttigieg seemed open to the concept, in the following quote courtesy of Transport Topics, but also recognized the logistical hurdles and drivers’ privacy concerns:
“If we’re committed to that view, then whether it’s upstream or at the vehicle level, some kind of road usage assessment is going to be necessary,” Buttigieg said. “The trouble is that nobody’s been able to present a version of that that fully resolves the privacy concerns and technical issues, but we certainly see some things being done, especially on the commercial side, that demonstrate that we can move in that direction.”
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The gas tax, in theory, produced a two-pronged effect. Obviously, it was a method for securing infrastructure funding. However, it was also happened to be a way of encouraging the public to drive more fuel-efficient cars, in turn lowering each individual’s contribution to carbon emissions.
Replacing the gas tax with a mileage-based one could certainly aid infrastructure funding, especially as the public gravitates toward electric cars en masse. But it won’t inherently promote a positive change in consumer behavior. In fact, if not done carefully, it’ll just give owners of the thirstiest vehicles a tax break. From The Washington Post:
Oregon’s tax rate of 1.8 cents per mile is equivalent to the 36-cent gas tax paid by a vehicle that gets 20 miles per gallon. Someone driving about 11,500 miles a year would pay about $207. That leaves owners of hybrids paying more than they otherwise would. It would be a good deal for drivers of large SUVs or pickup trucks, but in 2019, the legislature limited enrollment of new vehicles to those that get at least 20 miles per gallon.
Oregon has had a voluntary mile tax program going for the last eight years, called OReGO, whereby drivers who sign up receive some perks in exchange for their cooperation. Those benefits include credit to offset the gas tax they’d normally pay and reduced registration fees for electric vehicles.
To record miles traveled, drivers can either opt for a GPS tracking system or use an approved OBD-II mileage reporting device that simply reads the odometer. Of course, both solutions are more expensive to implement than a simple per-gallon gas tax, and also unlike a gas tax, place some degree of reporting responsibility on vehicle owners. Washington State is trialing yet more approaches, according to Bloomberg, including prepaying for estimated annual mileage.
GPS location data is “never disclosed to anyone but you,” according to the OReGO website, for drivers who opt for the GPS mileage reporting option. Only miles driven on Oregon roads are taxed, so location does need to be recorded at some level. Additionally, the site clarifies that “all data collected through OReGO is destroyed within 30 days of payment processing.” Nice to know, though it doesn’t necessarily quell concerns of a potential data breach.
Proponents of VMT tax argue it’s a more equitable approach, because EV drivers pay relatively little compared with their ICE vehicle-driving counterparts. That’s a fair point to make — ultimately, we should all foot the bill for the upkeep of the roads we use. However, it doesn’t account for that other positive effect of taxing gas, which is, again, encouraging more environmentally conscious vehicle choices.
Moving to a VMT system might result in more customers spurning EVs, because they’ll be taxed the same either way — not to mention the fact EVs are thousands more expensive that comparably sized ICE models. This could be why some states like Minnesota have explored hybrid schemes that incorporate fuel efficiency as a weighted factor in the mileage tax. A study conducted in the state in 2013 found that “Minnesotans tended to be more favorable towards [mileage-based user fee] system that would charge large and heavy polluting vehicles more per mile.”
It’ll be interesting to see how lawmakers reconcile funding infrastructure development with a tax system that doesn’t unduly punish people for selecting vehicles with reduced carbon footprints. Either way, it appears mileage taxes are in our future, like them or not.