Is the pay-per-mile tax here to stay?

If you don’t follow the news around the transportation industry, you may not have noticed an important report that recently hit the press. In its eleventh annual report What Do Americans Think About Federal Tax Options to Support Transportation?, the Mineta Transportation Institute published findings from its recent survey of 2,515 American respondents. The results may surprise you.

Over the years, sentiment toward a pay-per-mile tax has gradually softened but it still has some warming up to do. Certainly, it has come a long way since the first whispers of road usage charging (a.k.a. mileage-based user fees) nearly a decade ago. Years of research, testing, and educating the public have been paving the way for essential changes to our wilting roadway funding.

But the question remains: even if a per-mile tax can cut the mustard as a suitable, revenue-making alternative, will the American majority ever accept it?

In sum, we have listed just some important facts the survey results tell us about the perception of the per-mile road tax.

• Very few (only 3%) of respondents knew that the federal gas tax has not been increased in more than two decades.
• Approximately half of respondents supported some form of mileage fee, whether it is assessed on all driving or just business-related driving.
• If mileage fees were to become a reality, three-quarters of respondents would prefer to pay a mileage fee in smaller increments (e.g. at the pump or monthly bills) instead of one large, annual payment.
• Respondents concerned about privacy and being tracked were much less likely to support a mileage fee.

Now, here’s what we think this means and what it looks like in today’s existing mileage fee programs:

Most Americans are unaware of the outdated and dire state of our nation’s fund for road construction and maintenance. This is an important piece of insight. If people don’t know that a majority of funds used specifically for roadway construction comes from gas tax revenues, and they also don’t know that this revenue is shrinking thanks to fuel-efficient vehicles, why would they support an alternative funding system? Educating the public on why the gas tax is not working is absolutely paramount to laying the groundwork for a widely accepted alternative program.

What’s being done: Although a slow process, the public is increasingly learning about and participating in road-usage fee test pilots across the US, thereby broadening awareness. Rounds of testing with thousands of everyday motorists have proven that a road usage charge is a viable alternative to a higher gas tax. If you would like to learn more, read about why mileage fees make more sense than fuel taxes.

A pay-per-mile tax should be convenient, if not “invisible.” Since the first gas tax was implemented in 1919, vehicle owners have grown used to paying built-in, “invisible” taxes at the pump. People don’t consciously budget for gas tax, but they pay it regularly and easily. An alternative taxation method would need to be just as convenient to bar all confusion and ensure public compliance.

What’s being done: Departments of transportation and legislators have considered a variety of convenient funding alternatives such as increased gas taxes or additional car registration fees. What they are finding is that mileage fees are convenient, low-overhead, easy to implement, less burdensome on lower income families, and can be used to continue go-green incentives for electric car adoption.

Depending on the program design, mileage fees can be paid on an as-you-go, monthly, or quarterly basis. For example, in the Oregon OReGO program, drivers insert an Azuga plug-n-play device into their vehicles and Azuga automatically tallies and invoices their miles driven. If they opt in for a location-enabled mileage recording option, out-of-state miles are automatically deducted. Drivers pay into a digital Wallet, payment is sent automatically to the state, and the driver receives notifications when their Wallet needs to be reloaded. Soon, the Wallet will be able to conveniently add money on an automatic basis once the Wallet fund is low. This is fast, private, and near effortless.

Privacy must be king in a mileage fee program. Critics of mileage-based user fees continually beat this drum and for good reason. Vehicle owners and their families want peace of mind and assurance that their personal information will not be used for any purpose other than what’s necessary for mileage tracking. Personally identifiable information, location, and driving behavior are details the public wants to remain unseen by government agencies. Additionally, people want mileage recording options (MROs) to fit their individual lifestyle and level of comfort. If pay-by-the-mile programs are implemented, each system must be built with differing MRO choices and complete privacy in mind.

What’s being done: Existing per-mile tax programs have already accounted for these concerns and only mileage and vehicle information are shared with the government. A driver’s personal, location, and driving behavior information are invisible to government eyes. All the government can see, for example, is that a 2012 Nissan Sentra has driven 500 miles this month and owes [$((state’s per-mile rate multiplied by 500) minus gas tax paid)]. A set of mileage reporting options (MROs) are also available to fit individual levels of comfort. For example, a vehicle owner participating in the Oregon OReGO program may choose one of three MROs with or without GPS functionality. Additional premium services such as Azuga’s engine diagnostics, SafeZones, or 2MyCar navigation are visible only to each vehicle owner for his/her personal use.

Security must be a priority. Along the same thread as the aforementioned privacy needs, keeping drivers’ and their vehicles’ information secure ensures safety as well as privacy. Mileage fee programs must adhere to strict security guidelines to protect the American people and the government.

What’s being done: Rest assured, existing pay-per-mile fee administrators have taken strict security precautions and require private technology providers to do the same. Each private business partner is vetted, certified, and held accountable for security protocols and quality. As technology continues to evolve, so will technological protections.

So, will we see mileage fees in our lifetime?

Most definitely. It’s nearly inevitable, as Congress is working hard to pass a new infrastructure bill (Moving America Forward Act or H.R.2) that would direct the United States Department of Transportation to establish a nationwide pay-per-mile tax pilot program. The national program would be launched in an effort to ensure the long-term solvency of the Federal Highway Trust Fund and to improve the current and future state of our roads and bridges. Many states from coast to coast have completed (or are planning to complete) their own research pilots and are even working together to test how fees will be applied across state borders (like The Eastern Transportation Coalition’s pilot). Across the board, results are showing many benefits to switching away from the age-old gas tax and that implementation is fast, easy, and profitable. A nationwide pilot would bolster these positive conclusions and set permanent changes in motion.

What do we do now?

Until mileage-based user fees are mandated, careful testing is crucial to public acceptance and smooth establishment. Not only do locals need to see and/or experience how such a program will work in their community, more test data is needed to strengthen the efficacy and innovation of these programs. For example, although privacy and security measures are immense and carefully planned, they will continue to enhance over time as technology advances and more pilot test results become available. Additional applications (congestion pricing, parking pay, tolling, etc.) may also be added along the way. We encourage you to learn more about why you should join a mileage fee test or program in your area, if one is available.

In the end, Mineta Transportation Institute’s survey on alternative funding was taken before the economic loss in the wake of the COVID-19 pandemic. Legislators are taking advantage of the unique opportunity to make radical changes to how we think about investment in our infrastructure and how we should go about funding that investment. Change is in the wind. We suggest you fly with it.

P.S. Oregon drivers can (and should) join NOW

In Oregon, owners of vehicles getting at least 20 miles per gallon are encouraged to join the Oregon OReGO program. Oregonians with vehicles getting at least 40 miles per gallon are especially urged to join, as they may save money on registration fees that increased this year (2020) and will rise again in 2022.
Learn more or sign up now