Road Usage Charge vs. Road Congestion Pricing—What's the Difference?

Our nation’s infrastructure is crumbling. Both sides of the political spectrum and everyone in between can agree on that. Right now, the gas tax supports the Highway Trust Fund, but this has not been sufficient for over a quarter of a century. In recent decades, fuel-efficient and electric vehicles have grown in popularity and do not pay very much in gas taxes anymore. Meanwhile, the gas tax has not increased to keep up with inflation in over 25 years. 

These problems combined mean that we do not have enough money in the Highway Trust Fund to keep up with our nation’s infrastructure needs, and the government has had to shell out billions of dollars to pay for basic upkeep and cities’ improvements. Two prominent ideas that experts have suggested are road usage charges and road congestion pricing. The Oregon Department of Transportation has tested both of these ideas and continues to share its learnings. Let’s discuss what both terms mean and their pros and cons. 

What is Road Usage Charging? 

Road usage charging, also known as RUC, means that the government charges drivers for how many miles they travel instead of the current system of charging them based on how much gas they use. You may hear discussions of RUC call it many different names, such as mileage-based user fees (MBUF), mileage tax, vehicle miles traveled tax (VMTT), and distance-based user fees (DBUF). All of these terms refer to the same concept. 

This concept is already in play in some states and major cities, including Oregon, Utah, and Connecticut. In these states, drivers simply install a device into their OBD port and set up a digital wallet online. Then, as they drive, the system tracks how many miles they travel and automatically deducts money from their wallet based on these miles. In Oregon, the fuel tax that these drivers pay is credited to their digital wallets, so drivers are not taxed twice. 

What are the Pros and Cons of Road Usage Charging? 

Of course, with any policy, there are pros and cons. We have a detailed article on the pros and cons of this concept called “The End of the Gas Tax? Pros and Cons of the Mileage Tax.” But we will go over the basics here. 

Pros

• Safer Roads: Implementation of RUC could bring in an additional $340 million in funding for America’s streets and infrastructure. This money could be used to improve the 49% of our roads that are unsafe. 
• Fair for All Vehicles: Electric and fuel-efficient vehicles pay very little to nothing in the current system, despite their use of our roads. Under RUC, everyone pays in. 
• Costs the Same as the Gas Tax: When Kauai studied RUC, they found that drivers pay about the same regardless of whether the gas tax or RUC is in place. There are simply more drivers paying in. 

Cons

• Expensive to Implement: If states don’t find the right system, the policy could be costly to implement. It may require advanced technology and extensive administrative support. 
• Privacy Concerns: Many drivers are concerned about their privacy. It may be challenging to find support for these policies if drivers are not confident in the security of their data.
• Punishing Drivers of Fuel-Efficient or Electric Vehicles: Many argue that RUC takes away the incentive to buy eco-friendly cars. If other incentives aren’t offered, this may be an issue. 

What is Congestion Pricing?

Congestion pricing is another alternative to the gas tax, except it involves charging drivers for traveling in high-traffic areas during busy times of the day. Our article, “What You Need to Know About Road Congestion Charges,” explains these charges in greater detail, but we will go over the basics of these fees. There are four types: 

• Cordon Areas
• Area-wide
• City Center Toll Rings
• Corridor and Single Facility

The goal of these charges is not only to raise money for infrastructure but also to reduce congestion in major cities. 

What are the Pros and Cons of Congestion Pricing? 

Just like with RUC, there are pros and cons to congestion pricing. 

Pros

• Reduce Congestion: This will reduce time wasted for drivers and reduce costs for businesses. 
• Reduce Pollution: Fewer cars idling on the road will mean less pollution. 
• Reduce Journey Time: This is good for commuters, but it is also a positive for emergency vehicles.

Cons

• Affects Businesses in Cities: Businesses in the middle of cities may lose out on customers.
• Expensive to Implement: It will be more costly to collect these charges than collecting a gas tax. 
• Inequality: Many are concerned that congestion pricing will take a higher percentage of income in taxes from the poor. 

Learn More About Funding Infrastructure

Azuga is the place to go if you want to keep up with news about funding infrastructure. We are at the forefront of vehicle telematics technology, so this subject is critical for us. Our blog and Info Center frequently posts updates on RUC and congestion pricing; follow us to remain in the know.