A Closer Look: Are road usage charges burdensome?

May 14, 2021

This blog is one of a six-part series titled A Closer Look at Road-User Fees. The series explores six major objections to the implementation of a per-mile road charge and aims to dispel misconceptions and disinformation.

As discussions around a nationwide vehicle miles traveled fee heat up, a persistent complaint is that rural and low-income drivers would be adversely affected by a per-mile fee. The belief is that rural residents do not have access to public transportation systems and tend to drive longer distances than urban residents. This belief also claims low-income vehicle owners can’t afford more taxes. So, would these drivers pay more money under a road usage charge program?

To answer this question, let’s look at some basic facts:
  • Vehicle owners already pay a per-mile fee in the form of a gas tax. Everyone pays money per gallon of fuel, and every gas-fueled vehicle burns some amount of gas per mile. The per-gallon tax amount varies from state to state and, when calculated into a per-mile fee, the cost depends on each vehicle’s fuel-efficiency. A hybrid vehicle, for example, pays less fuel tax per mile than a gas-guzzling, older model vehicle. Either way, the more you drive, the more you pay in fuel tax.
  • Road usage charges are not a "double tax.” Road usage charging systems automatically credit drivers any fuel tax paid at the pump. Drivers do not pay both per-gallon taxes and per-mile fees. Road usage charges are an alternative to the gas tax as opposed to an addition to it, and they are equitable to highly fuel-efficient and electrical vehicles which incur little or no gas taxes.
  • Low-income drivers typically drive older, less fuel-efficient vehicles. This means they buy more gas and, in turn, receive more fuel tax credit; therefore, the impact of road usage charges is negligible. In general, only more affluent individuals drive hybrid and electric vehicles, which means higher-income drivers operating these vehicles would contribute their fair share for wear and tear on the roads under a road usage charge program.
  • Rural residents do not drive more miles than urban drivers. Studies on potential impacts of switching to a road usage charge found that rural residents drive longer distances than urban residents, but they also make fewer trips. Drivers in rural areas are paying more in fuel taxes than urban drivers in similar vehicles. A per-mile fee would alleviate this disparity.
  • The gas tax has become an arbitrary, “some users pay/all users benefit” model. Rural drivers generally own less fuel-efficient vehicles and spend more money on gas and gas tax—unfairly shouldering them with a higher percentage of highway funding under a fuel-based taxation system. The unfairness problem is compounded by the fact that more affluent drivers (generally speaking, urban drivers who own electric and hybrid vehicles) pay little to no gas tax.

In the end, a mileage-based user fee is a more fair, equitable funding mechanism for all drivers. Neither rural drivers nor low-income drivers would be financially burdened. In fact, most rural drivers would pay slightly less than they do in current fuel taxes, and all households would notice only a negligible difference in monthly expenses.

Modern transportation is growing increasingly electric and the fuel tax no longer makes sense in the long term. As President Ronald Reagan once said about the federal fuel user fee (a.k.a. “gas tax”) in 1982, “Good tax policy decrees that, wherever possible, a fee for a service should be assessed against those who directly benefit from that service.” The gasoline tax was the user fee at that time nearly 40 years ago. Today’s technology calls for a new model. It’s time to make the shift to a mileage-based user fee.

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