6 States Testing a Mileage Tax
By Samantha Oller on Jun. 29, 2016OAKBROOK TERRACE, Ill. -- As states wrestle with funding for road and bridge repairs, some are breaking with the traditional cents-per-gallon fuel tax model to test vehicle miles traveled (VMT) taxes. While the logistics can vary, the typical VMT setup involves installing a device in the taxpayer’s vehicle to track miles driven, and then transmitting the information for billing.
It could prove to be a tough sell with drivers. A recent consumer survey by the Mineta Transportation Institute found that mileage taxes were much less popular than straight cents-per-gallon options. For example, 75% of respondents supported a 10-cent-per-gallon (CPG) increase in the gas tax if the revenue went to projects maintaining roads and highways. But the highest level of support for a mileage tax reached only 48%, and that was for a fee based on a vehicle’s pollution levels, which would average out at 1 cent per mile. A flat 1-cent-per-mile tax earned only 23% support.
Regardless, some policymakers are willing to get creative to prop up transportation funding. The following are six states testing or poised to test the VMT model.
Connecticut, Delaware, New Hampshire and Pennsylvania
East Coast states are hoping to launch a VMT pilot to determine if it could help boost funding for roads. The I-95 Corridor Coalition, a group of transportation leaders from 16 states, has applied for a federal grant to test a VMT, according to The Washington Post.
Pilots would take place in four of the states—Connecticut, Delaware, New Hampshire and Pennsylvania. Fifty volunteers from each of the four states would participate in the test, which would involve some type of technology to track miles traveled. The participants would receive “faux invoices” each month for the miles driven. Based on the results, the coalition states’ legislatures and residents could determine if a VMT was workable.
However, some Republican lawmakers in Connecticut’s state legislature already have attacked the idea of a VMT as yet another new tax, according to the Connecticut Post. This is despite Gov. Dannel Malloy (D) and transportation officials’ insistence that the state is not actually considering adopting a VMT, but rather just wants to help test the idea. []
California
California’s VMT pilot is set to launch this July. Over the next nine months, the California Road Charge pilot will test various ways to collect and tax mileage data, as well as work through the processes for securely collecting and managing it. The pilot will test mileage-tracking approaches, including a flat annual fee that provides unlimited road use for a specified time; prepaying for mileage; a charge based on periodic odometer readings; and a device that automatically transmits the distances to an account manager for invoicing. Volunteers will receive a faux invoice through the mail or a website.
An independent third party will evaluate the pilot results and report them back to the state legislature and California Transportation Commission (CTC) by July 2017. The CTC will then make its own recommendations by December 2017 to the legislature, which will ultimately decide whether to adopt a full-scale VMT program.
While the state initially planned for 5,000 volunteers for the pilot, it actually had 8,000 signed up as of April, according to Governing magazine, a publication for state governments.
Oregon
Oregon is home to the first and longest-running VMT pilots, conducting three in the past decade. The latest, OReGO, officially launched in July 2015. Volunteers opt to pay a 1.5-cent-per-mile road usage charge in lieu of the state’s 30-cent-per-gallon (CPG) gasoline tax. They can choose from two account managers, with GPS- and non-GPS-enabled distance-tracking options. Participants earn fuel tax credits based on their charges for in-state miles driven, so they can reclaim any taxes paid during fill-ups.
OReGO has a participant cap of 5,000, although as of April 2016, only 900 Oregonians have signed up, according to Governing. And many of the current participants have vehicles with a decent fuel efficiency—43% had an average economy of 22 miles per gallon.