September 27, 2021
If you’ve been following our blog, you’ve likely heard of road usage charging or the vehicle mileage tax. The vehicle mileage tax is a solution to the issue of our nation’s crumbling infrastructure. The gas tax can no longer fund the Highway Trust Fund due to inflation and the prevalence of electric and fuel-efficient cars. Many states are considering a vehicle mileage tax to fund repairs and maintenance of their aging roads. A vehicle mileage tax simply means that drivers will be charged for how many miles they travel instead of how much fuel they use. In this article, we will discuss how this system would work.
Keep Drivers Safe: Right now, about 49% of our nation’s roads are unsafe. This is a staggering number that leads to 22,000 traffic fatalities every year. A vehicle miles traveled tax would bring in an additional $340 million in funding to the Highway Trust Fund to repair and maintain these roads, so our drivers would be safer.
Fair for Everyone: As it stands right now, fuel-efficient and electric vehicles pay very little to nothing at all into the Highway Trust Fund. This is not fair because they inflict the same wear and tear on the road when they drive. The concept behind a vehicle miles traveled tax is that everyone who drives on the road pays into its care. It is far fairer to all drivers.
Same Cost as Gas Tax: During Kauai’s consideration of a vehicle miles traveled tax, they studied what it would cost drivers versus the gas tax. They found that the gas tax costs their drivers $75 annually and that a vehicle miles traveled tax would cost the same. The difference is that more drivers are paying into the system, bringing about more funding for the Highway Trust Fund.
Only two states have implemented a vehicle miles traveled tax: Oregon and Utah. They both have implemented it very similarly, so we will use Oregon in our example. Oregon’s vehicle miles traveled tax program is called OReGO. OReGO is entirely optional. After 2020, registration for electric vehicles and vehicles with alternative fuels increased. To avoid paying these increased registration fees, drivers can enroll in OReGO.
OReGO uses Azuga Insight to track miles traveled. It is very easy to install and does not require much administrative staff to monitor.
All a driver has to do is plug the Azuga Insight hardware into the OBD port in their vehicle. Most vehicles built after 1996 have this port. Once they’ve installed this, the driver doesn’t have to do anything else to track their miles! To pay, all they have to do is set up a digital wallet through an app on their phone. As they travel, Azuga automatically deducts money from their digital wallet based on the miles they drive. It doesn’t require any human resources or effort on the driver’s part; it’s easy as pie! It also credits the fuel tax, so drivers don’t have to pay both fees.
Drivers can also view their road usage charge statement. For each trip, they can view their distance traveled, fuel cost, fuel tax credited, vehicle miles traveled tax, and balance due (if they have one).
More and more states are considering the vehicle miles traveled tax as the nation’s infrastructure continues to age. Keep up with what’s going on with these programs by following our blog! Azuga is on the front lines of the mission to keep America’s streets safer, both for fleets and all drivers.