It’s clear that the current model of taxing fuel to pay for roadways is not sustainable. As vehicles get more fuel efficient and infrastructure maintenance costs rise, county, state, and federal budgets stretch thin, some to the breaking point. Many ideas have been proposed as replacements, but the most persistent is the idea of a “vehicle miles traveled” tax, or VMT. After years of discussion, one state has finally decided to try it.

About a century ago, Oregon was the first state to enact a fuel use tax as a way to fund transportation infrastructure development and maintenance. Now, starting this year, Oregon is the first state to begin a pay-per-mile (VMT) tax. The program, which launched as a voluntary pilot system this year, aims to include 5,000 vehicles to test the viability of switching from a fuel-use tax to a pay-per-mile system.

How Oregon’s VMT Works

shutterstock_6613462Called OReGO, the scheme has participants utilizing GPS-based tracking devices in their cars – which are supplied by third party companies – to track miles driven inside the state. Some of these trackers are less sophisticated, tracking only miles driven within Oregon’s borders. Others are more complex, tracking public road versus private road use, including tollways. Part of the test is to find out whether a variety of options for GPS tracking is better than a set system requirement.

Participants in OReGO then pay 1.5 cents per mile driven with the tracker being the measurement. When a bill is received from Oregon for the miles driven, the participant subtracts road taxes already paid via fuel receipts and pays the difference. For now, there is no refund scheme, though balances can carry forward to the end of the year.

The goal of the pilot is to test the system as designed and allow for modifications and fine tuning until it is a better fit for mass use. The Oregon Department of Transportation hopes that the OReGO system can become the norm within a few years, replacing fuel taxes.

Other side benefits of the GPS tracking system include the statistical data that can be gleaned from thousands of vehicle miles being tracked by location, giving the ODOT valuable information about where driving takes place the most and which roads, bridges, etc. are most often utilized and when. This could potentially change how maintenance is undertaken.

Controversies

There are controversies with a VMT, of course. The most significant are privacy concerns. Because the system tracks the person and, theoretically, tracks them not just by mileage driven, but by where and when the driving took place, there are civil liberties concerns about privacy. This is understandable and is the chief argument against a VMT system such as this one. Solving this problem is not going to be easy.

Another problem comes from the electric vehicle community. Some EV drivers are complaining that the system unfairly benefits those who drive “gas guzzlers” and de-incentivizes the use of fuel efficient vehicles. The concern comes from the fact that the rate is flat across the board, so the driver of an electric Nissan LEAF, for example, pays the same amount as the driver of a Hummer for the miles driven. These concerns have some merit, but if the OReGO system becomes state-wide, most of the arguments EV drivers are making fall flat. Currently, EVs are a part of the reason road use tax coffers are running low. This would remedy that. Other proposals to include vehicle weights in the tax also have merit, as heavier vehicles cause more road wear than do lighter ones. This would also allay concerns from efficient vehicle owners, as more efficient vehicles also tend to be lighter.

Finally, economics have pointed out a likely fatal flaw in the VMT idea: it doesn’t account for inflation. One of the reasons the taxes collected at the pump are no longer sufficient is that costs have gone up. The same mile of roadway thirty years ago was far cheaper, in dollars, to maintain than it is today. Inflation raises costs and flat taxation systems like the VMT do not adjust for that. The counter to this argument, of course, is to have the tax change annually, bi-annually, or at some other interval to account for inflationary forces. Today’s 1.5 cents per mile can become tomorrow’s 2 cents per mile.

Other Options

Other ideas for collecting a more fairly-balanced road use tax have been proposed as well. One compelling plan has been to convert all highways and freeways to toll roads similar to the express and tollways often found in metropolitan areas. Current technology has improved to the point that vehicle identification systems, such as license plate cameras, can capture the majority of the vehicles on a roadway and automatically tie the vehicle to the name and address of an owner. The system becomes largely automated and at scale, it is relatively inexpensive to implement. There are, of course, negatives to this idea, as with any other.

Another proposal involves taxing vehicle licensing, tires, or other universally-required items on a vehicle. Washington State, for example, now charges electric car owners $100 a year on top of their vehicle licensing fees. That money goes to the highway fund. Although that is merely a stop-gap, it could be a hint at another option: quarterly or annual charges for road use at a flat rate. This also has obvious down sides.

Why Oregon’s VMT is Going to Become Yours

The great experiment happening in Oregon is very likely to prove that a vehicle mile tax is viable as a replacement for fuel taxes. If it does, like the fuel tax Oregon began a century ago, it is going to catch on and spread quickly. Other states will adopt the system in order to avoid bankrupting their highway funds.

How long this would take is anyone’s guess, but after fourteen years of study and discussion, Oregon has decided to take this first bold step. We can likely expect to see it become statewide there within a decade; probably sooner than later. From there, other states are likely to be quick to adopt. So the VMT idea being tested now in Oregon may become national in thirty years or less.

Search used cars for sale and find the best deals near you at iSeeCars.com.