Why Mileage Fees Make More Sense than Higher Gas Taxes

May 17, 2017

Recent news highlights the deteriorating state of our nation’s infrastructure and the need for an increase in transportation revenue. Many are calling for higher gas taxes; however, politicians have become wary of such taxes—and for good reason. Today, Americans increasingly view gas tax as a regressive fee (i.e. taking a proportionally greater amount from people with lower incomes due to older vehicles with lower mileage) and federal gas tax raises have been on a halt since 1993.

Many states are proactively seeking funding alternatives, and many are finding that a pay-per-mile fee or road usage charge (RUC) model has much promise. This model applies a philosophy more in line with current society’s needs, demands, and ever-changing technology.

The following are some of the ways RUC is a better fit for national infrastructure:

  • RUC mirrors how people travel today. As ride sharing (e.g. Uber or Lyft) increases in popularity, gas tax revenue is further diminished. Contrarily, charging per mile is far more equitable and lucrative. Miles are simply tallied and billed based on technology already available (e.g. OBDII devices, mobile phone apps, etc.) or other options such as mileage permits (for those who prefer not to feel like they’re being “tracked.”)
  • RUC is a fair, pay-as-you-go model. Much like we already pay for utilities, RUC applies a pay-for-what-you-use concept already familiar to everyone. Additionally, similar pricing models may be applied to potentially help curb congestion in heavily trafficked areas.
  • RUC doesn’t punish low income or rural drivers. Unsurprisingly, many low income and rural families drive older or larger vehicles with lower gas mileage. This means they pay more at the gas pump than other vehicle owners and they would likely receive a tax rebate under the pay-per-mile model.
  • RUC is unaffected by increasing fuel efficiency. Today’s vehicles are increasingly fuel efficient and more people are opting in for hybrids or electric vehicles, further weakening the already limp gas tax revenues. RUC ensures every vehicle owner pays for exactly what they use—no more, no less.
  • RUC is a success in Oregon.Launched in July 2015, Oregon’s road usage charging program, OReGO, is the nation’s first mileage fee pilot. The program brags an 85% retention rate of its original participants and is still open to volunteers today. Some drivers receive tax rebates but all drivers pay their fair share for road use. Meanwhile, California, Colorado, and Minnesota have launched similar pilots and additional states are pursuing the same.

Azuga has been instrumental in the testing and development of the road usage charging concept, having completed RUC pilots in California and Colorado and currently operating the RUC pilot in Oregon. Azuga is on the frontlines, innovatively advocating our on-the-road customers. Today, we show our support for Infrastructure Week (May 15–19). Please follow us at @AzugaInsight as well as the #TimeToBuild movement.

Oregon’s OReGO pilot program is currently underway and accepting applicants, though some spaces are limited in some mileage categories. Click here for more information on the free connected car services Azuga offers to pilot volunteers.

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