A number of states are considering taxes on drivers based on the number of miles they drive. The consideration comes as gas tax revenue has fallen due to increased fuel efficiency and changes to Americans’ driving habits.
The Biden administration is in the process of unveiling a pilot program that could allow states or the federal government to charge drivers on a per-mile basis. The program would be funded through a 2021 infrastructure bill.
Currently, only Oregon, Utah and Virginia utilize this per-mile system of taxation. Oregon has used a pilot program that charges drivers by the miles they put on their car, rather than through traditional gas taxes. Those who participate in this system use an electronic device that tracks their mileage for use by the state.
Fuel-efficient and electric vehicles mean states are collecting less gas tax revenue, and that’s a problem for road budgets. Potential solutions: taxing drivers for the miles they travel, new taxes on EVs and electricity at public charging station. https://t.co/W9OsSixCha
— The Associated Press (@AP) June 25, 2023
States have become creative in determining tax revenue due to time spent on the road. Colorado now levies a 27-cent tax on home deliveries of goods purchased online.
Some states, such as Tennessee, have implemented express toll lanes that bypass heavily congested traffic areas.
The program has been used in a number of states across the country but is especially concentrated in the South. Among the number of new toll roads built in the country over the last decade, a majority have been such price-managed lanes.
The voluntary nature of the toll roads has allowed states to raise additional revenues without raising state gas taxes.
The city of San Diego, California is considering a four-cent per mile driving tax.
There are a number of reasons for a decline in gas tax revenues. Higher gas prices tend to discourage driving, and hence gasoline and diesel usage.
In addition, average fuel efficiency has increased over the last two years, leading to less fuel consumption.
Furthermore, States have become creative in determining tax revenue due to time spent on the road. Colorado now levies a 27-cent tax on home deliveries of goods purchased online. The number of electric vehicles sold in the country is estimated to increase significantly over the coming decade.