Is a tax-by-mile system ready to replace fuel taxes?

Some in Congress think a tax on vehicle miles traveled would be better than a gas tax as motor vehicles use less and less fuel . But such a tax may not be ready just yet.

Peter DeFazio, Sam Graves are posing for a picture
Chairman Peter DeFazio, D-Ore., left, and ranking member Rep. Sam Graves, R-Mo., at a House Transportation and Infrastructure Committee last year. (Tom Williams/CQ Roll Call file photo) (CQ Roll Call)
Posted February 10, 2020 at 6:30am

Congress enters the debate over how to shore up a highway trust fund headed for insolvency with a conundrum: The GOP is reluctant to raise the federal fuel tax, the tax isn’t a long-term solution anyway, and the most popular alternative to the gas tax isn’t ready for prime time.

That alternative is a levy based on the number of miles a vehicle travels rather than the amount of fuel that goes into the vehicle. The so-called Vehicle Miles Traveled, or VMT fee, is being tested in states such as Oregon and Utah. Washington state, meanwhile, issued a report in January highlighting the need to move away from the fuel tax toward such a system.

In the House, Transportation and Infrastructure Committee ranking member Sam Graves, R-Mo., backs the idea. And other Republicans, such as Senate Finance Chairman Charles E. Grassley, R-Iowa, have made it clear that raising the 18.3 cent a gallon federal fuel tax is politically unpalatable.  

A Graves spokesman said the senator hasn’t ruled out any of the options being discussed. “But he does feel that a gas tax increase would be very difficult.”

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The problem? Even its biggest backers say the federal government isn’t ready to rely on a VMT.

And for many policy- and lawmakers, the VMT raises tough privacy questions about the government tracking the travel of motorists.

“I’m not sure we’re ready to jump to a full-scale national system yet,” said Barbara Rohde, executive director of the Mileage-Based User Fee Alliance, the trade association backing VMT systems. She backs the idea of a national pilot program in the interim. “We still have testing that needs to be done.”

Long transition

Said her colleague, Jack Basso, the chairman of the alliance: “We should raise the gas tax 15 cents, stabilize the fund and then move over a 10 to 15 year period to something akin to a mileage-based user fee.”

Even those currently using the program say the federal government is far from ready.

“There would be a whole bunch of things that would need to worked on,” to scale up a fee-based program on a national level, said Maureen Bock, program manager for OreGo, the Oregon program that allows drivers to opt for paying the state fuel tax or VMT taxes. 

Bock, who emphasized she was expressing her personal opinion, said Oregon’s program, which began in July 2015, has been relatively successful. About 1,800 drivers have gone through it and 700 are enrolled today. 

Efforts to educate Oregonians about the VMT include assurances that their privacy will be protected by anonymizing driver data. 

Despite her hesitation about national implementation, the program has demonstrated its potential in Oregon, Bock said. 

Drivers there who choose the VMT tax get a credit for the amount of gas tax they pay; their cars keep track of miles driven and gas consumed via a special diagnostic device that’s easy to install.

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“I think it’s very much proven it can be a viable option for the future,” she said.

Those who participate can do emissions testing remotely thanks to the diagnostic device, which also lets them see if anyone using their vehicle — a teenage son or daughter, perhaps — is driving where and when they say. Drivers can get diagnostic codes to determine battery health and check their engine thanks to the device as well.

On Jan. 1, Utah implemented its own optional road usage charge for electric and hybrid vehicles on a voluntary basis, said Eileen Barron, a spokeswoman for the Utah Department of Transportation.

Options

Electric or hybrid vehicle owners there can choose to pay a flat fee or enroll in the mileage-based program. The Utah program also depends on an onboard diagnostic to determine miles driven. More than 900 people enrolled in the program in its first month.

Current House Transportation and Infrastructure Chairman Peter A. DeFazio, D-Ore., said he’s open to transitioning to a VMT system. 

But not yet.

“We are ultimately going to move to VMT,” he said but added, “we are not there. There’s no way to instantly convert the country to VMT.”

He’s called for a modest increase in the gas tax, indexing it to inflation. But he admits Republicans “are nowhere near a consensus” on whether to back a gas tax.

Which leaves him with an ambitious plan and no clear route to pay for it.

“Absent Donald Trump, I don’t think we’re going to be able to do it with a gas tax increase,” he said.