A Closer Look at Road-User Fees Series - Part-3: Does raising the gas tax or DMV fees make sense?

A Closer Look at Road-User Fees Series: 

This blog is Part 3 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 state highway funds continue to wane and traffic congestion grows, legislators everywhere are looking for solutions. Currently, state governments utilize revenues from the state and federal fuel taxes to fund the maintenance and construction of public roads and bridges, but increased fuel efficiency and the proliferation of electric vehicle adoption continue to drive those revenues downward. Compounding the problem, legislators have been unsuccessful (or in most cases, unwilling)  in raising the federal fuel tax per gallon since 1993.

Many states are looking for alternative funding mechanisms and road usage charging (a.k.a. vehicle miles traveled fee or mileage-based user fee) is a top solution among those proposed. But why not increase the gas tax instead? Or would it be more efficient to apply Department of Motor Vehicle (DMV) registration fees?

Benefits of Road Usage Charges

Everyone Pays Their Fair Share

Like the fuel tax, road usage charges are a usage fee. The more you drive, the more you pay. Likewise, you pay less when you drive fewer miles. In other words, everyone pays for exactly how much they use the roads—much like how you pay for utilities. Azuga’s plug-in technology can even automatically deduct miles driven out-of-state and on private roads. On the flipside, raising DMV registration fees would require people who drive less to subsidize those who drive more, and raising the gas tax would burden people with the least fuel-efficient vehicles (which tends to be low income or rural families.) A road user fee ensures fairness to all drivers.

All Vehicles Are Included

In a road usage charge system, electric vehicle (EV) owners can finally contribute their part to the upkeep of public roads. Under the current gas tax system, EVs pay nothing toward the upkeep of public roadways, and more of them hit the road every day. And what about charging EVs increased fees at the DMV? This goes back to the same problem as before: all EV owners would be required to pay the same amount regardless of how many miles they drive.

Technology is Multipurpose

The automated systems used to report mileage can serve additional purposes such as tolling, congestion pricing, or transportation research. These are all functions a gas tax cannot complete.

Equity Can Be Built In

Thanks to automated mileage reporting technology, road usage charges can be more fair than a gax tax. Everyone pays for exactly what they use and at the same rate. Depending on the state, some programs could even apply variable rates according to income or tax filing status of individual drivers. The variable pricing concept could also be applied to categories of fuel efficiency or estimated wear and tear a vehicle causes to road surfaces. In the end, under a road usage charge system everyone pays their fair share.

It’s Time-Tested

Many states have tested the road user charge concept over the last two decades, have seen positive results, and some legislators have already taken action to implement these systems. Oregon is home to the country’s very first full-fledged program, OReGO, which is accepting most light-duty vehicles with a fuel efficiency rating of at least 20 miles per gallon. Drivers paying road usage charges within OReGO are eligible for deep discounts on vehicle registration fees for their electric vehicles or vehicles getting at least 40 miles per gallon.

Conclusion

Increased gas taxes would be unfair to rural drivers who usually operate low-efficiency vehicles such as SUVs and trucks. Even if per-gallon premiums were significantly raised, gas tax revenues would continue to shrink as America continues to pursue electrification. Implementing large fees is no better. Using flat rates such as increased DMV registration fees requires everyone to pay the same amount, regardless of whether they drive a fraction of the miles someone else drives.

There are several benefits to a road usage charge and it is a modern, sustainable solution to a longstanding problem. Road charges ensure fair contributions from every driver and the technology can be leveraged for several purposes.

Stay tuned to our blog for more on A Closer Look at Road-User Fees.

Up next:

Are road usage charge programs too complex and costly to operate?

Previously:

Are road usage charges burdensome?

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