Vehicle Miles Traveled (VMT)-based Charging System

Michael Green(Washington, December 1, 2013) Taxing the vehicle miles traveled (VMT) of motorists as the primary mechanism for funding transportation is an idea that has garnered increased attention as a potential replacement for state and federal motor fuel taxes. While motor fuel taxes have long generated the majority of revenues for the Highway Trust Fund, increasing vehicle fuel efficiency and the emergence of alternative fuels threaten the long-term viability of this critical funding source.

Under a VMT tax system, vehicles would be equipped with technology capable of logging the number of miles traveled.  Various levels of sophistication are being tested.  The technology could allow for multiple levels of taxation (federal, state, local) and enhanced pricing systems (drivers could be charged by time of day, level of congestion, type of road, etc.).  The variable pricing ability enabled by a VMT system is considered a key benefit by some and a source for concern by others.  Pricing could be established to help combat congestion, pollution, or excessive road wear.  Total charges could be calculated and paid either at the gas pump or via a monthly bill.

The two national transportation commissions authorized by SAFETEA-LU recommended transitioning to a VMT system for the long-term, beginning the transition to such a system in the next ten to fifteen years. A VMT fee pilot project was completed last year in Oregon and the University of Iowa is currently field testing a system in six states: California, Idaho, Iowa, Maryland, North Carolina and Texas.  The Oregon pilot demonstrated that the use of technology to charge drivers by the mile is viable, but underscored that a variety of technical, administrative and public concerns would need to be overcome before it could be implemented statewide, or at the national level, including consumer privacy concerns, communications standards between the vehicle and service infrastructure, auto manufacturer supported specifications and testing, tax collection and revenue distribution.  Also, an upcoming study by the National Academy of Sciences is expected to conclude there are limited deployment options in the next few years.

AAA Recommendations

  • A number of credible sources have come to similar conclusions about the need to shift to a vehicle miles traveled charging system.  However, a nationwide VMT system, or even a state-level system, can’t be implemented next week, next month, or even next year.  In the short term we must rely on existing funding mechanisms (gas tax, tolling, truck engine taxes, etc.) to adequately fund the transportation system.
  • Pilot tests in Oregon and other areas have demonstrated some of the technical challenges that would need to be overcome with a VMT system, in addition to addressing the public’s significant concerns about privacy.  Any future alternative to the gas tax must be carefully evaluated as to its ability to be efficiently implemented; accepted by the public; allocated fairly and equitably; fully dedicated to transportation needs; and resistant to fraud and diversion.

While additional testing of the VMT concept is conducted, policymakers will need to be upfront with Americans about the various transportation funding options – what they’ll be asked to pay, and what they can expect in return.

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