With each gallon of gas pumped in the United States since 1932, drivers have been paying taxes. The revenue is used for road repairs and public transportation such as train and bus systems.
Currently, the Fed takes 18.4 cents per gallon for gas or 24.4 cents per gallon for diesel. State gas taxes range from a national high of 61 cents for gas in Pennsylvania, to a low of 8.95 cents in Alaska.
But environmentally motivated improvements in fuel efficiency and the move to electric vehicles (EVs) translate to less gas sold, resulting less tax revenue collected.
State and federal governments are looking for a new way to fund transportation. Through numerous studies by transportation organizations, they have landed on mileage-based user fees (MBUF); vehicle miles traveled fees (VMT); road user charges (RUCs), or highway use fees (HUF). The acronyms all mean the same thing: Drivers pay a tax for each mile traveled.
“All vehicles are going farther on less gas, and that is great for our wallets, especially with the gas prices going up. But it’s not so good when our transportation system is dependent on that fuel tax,” Trish Hendren, executive director of the Eastern Transportation Coalition, told The Epoch Times. “The link between usage and payment is broken.”
The coalition describes itself as a partnership of 17 states and Washington, D.C., focused on connecting public agencies across modes of travel to increase safety and efficiency. Member states in the coalition include Alabama, Connecticut, Delaware, Florida, Georgia, Kentucky, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Tennessee, Vermont, and Virginia.
But the move to user-based fees is a nationwide effort being discussed in every state. Oregon, Utah, and Virginia have already implemented pilot programs.
At least 31 states have laws requiring a special registration fee for plug-in electric vehicles. Of those, 18 states also assess a fee on plug-in hybrid vehicles, according to the National Conference of State Legislatures.
Fee for EV and Gas Power
Virginia implemented a new highway use fee for electric and high-efficiency gas vehicles in 2020, in addition to its existing vehicle license registration. The HUF is around $20 and is calculated based, in part, on a vehicle’s fuel efficiency.
In 2022, the state started offering Virginia’s Mileage Choice Program, a pilot program giving drivers paying the HUF the option to pay on a per-mile basis. They save money if they drive less than 11,600 miles, the average driven per year by all Virginians. Miles are recorded by a device installed on a person’s car and connected to a smartphone. Programs in Oregon and Utah are similar.
“The longer-term vision for a distance-based fee is it will replace the fuel tax,” Hendren said. But for now, those who drive high-efficiency gas vehicles often pay twice: both at the gas pump and with the HUF. In Virginia, drivers with fuel-efficient vehicles getting 25 miles per gallon or greater must pay the HUF.
In Utah, all plug-in hybrid and gas hybrid vehicles must pay the Road Usage Charge, ranging from $21.75–$56.50. EV owners who don’t buy gas pay $130.25 a year.
In Oregon, the vehicle registration fee is based on fuel efficiency. The better the mileage (the less gas used), the higher the cost of registration. But those with high-efficiency vehicles can enroll in OreGO and get a registration discount. OreGO participants pay 1.9 cents for each mile driven, and the money goes to the state highway fund. A device on the vehicle tracks miles driven, and drivers of fuel-powered vehicles can receive a credit for fuel tax and remote emissions testing, the OreGO website says.
Read More: Pay per Mile: States Move Toward User-Based Road Tax