The mileage tax: coming soon?

Russell Sadler

How would you like to pay your highway taxes based on the miles you drive rather than the gallons of gas you buy. You may get the chance.

The Oregon Department of Transportation plans to test a system of charging by the mile next year in Portland. The pilot program does not have much visibility yet, so it is not controversial. It should be. Pilot programs have a way of becoming permanent programs.

Taxing highway use by the mile rather than by gallons consumed is a radical shift in the tax burden. It discriminates against motorists who live in sparsely populated parts of Oregon to solve a problem that exists largely in the Willamette and Rogue Valleys and Central Oregon.

Oregon’s gallon-based gas tax -- 24 cents a gallon is constitutionally dedicated to state highway construction and maintenance -- no longer brings in enough money for two reasons.

The Legislature has already spend a large part of it for the next few decades. Beginning in 2001, the Republican-controlled Legislature passed the grandly named Oregon Transportation Investment Act. It was a list of pork barrel highway projects hidden behind badly needed projects to strengthen bridges for increasingly heavy trucks and make bridges more earthquake resistant.

Instead of raising taxes, the Republicans decided to borrow the money and pledge future highway fund revenues to pay off the bonds. Money spent on interest payments reduces funds available for highway maintenance.

Gasoline tax money is also declining relative to the miles Oregonians drive for another, counterintuitive reason. The entire fleet of vehicles we drive is actually getting more fuel-efficient. The media pay attention to gas-guzzling SUVs and monster pickup trucks but ignores the news that the overall efficiency of all vehicles has actually increased due largely to competition from Japan and government air pollution control regulations.

These two trends combined mean there is less money available from the present gas tax at the same time more vehicles are driving more miles on many Oregon streets, roads and highways.

Oregon’s decision to test taxing highway use by mileage instead of by gallons consumed is not so much because it is a better method, but because the federal government will pay $2.1 million of the $2.9 million cost. The problem with taxing by the mile is that not all driving creates the same problems and all vehicles do not impose the same wear and tear on the highway system.

ODOT plans to divide the pilot program’s 300 drivers into a control group that will pay the 24 cent a gallon state gas tax and second group will pay 10 cents a mile to drive during morning and evening rush hours and 0.4 cents a mile all other times for instate driving.

The pilot program will be conducted in Portland with cars equipped with global positioning system receivers to record mileage and transmit it to ODOT when drivers buy fuel at one of two independent gasoline dealers.

The pilot program was originally planned in Eugene, but ODOT officials say most Eugene gas stations are corporate-owned and the the national gasoline companies owned stations in Eugene decided not to participate. It is not clear whether they just didn’t want to hassle of a pilot program or feared bad publicity, but corporate-owned gasoline stations have reason to worry about controversy.

The GPS technology ODOT will use to record mileage for tax purposes has the capability to track a vehicle anywhere and record parameters like speed, braking, etc. Similar technology is now used by some trucking companies to keep track of their drivers and delivery vehicles.

ODOT insists it will disable the tracking function of the GPS technology during the pilot program. But onceit is installed on a large number of vehicles, there is no guarantee the Legislature will not require the tracking function enabled -- particularly if lobbied by interest groups that could make money selling the data. If you have actually read any “Privacy Policy” you know you have no privacy.

If a commercial use doesn’t emerge for tracking data, it will certainly eventually be subpoenaed in civil and criminal court cases to try and fix blame in traffic accidents and track suspects in abduction cases.

Lawyers are already trying to subpoena credit card data and preferred customer card records in drunk driving cases in an effort to establish drinking habits. Motorists are trying to disable “black boxes” that record driving speeds, braking and other parameters now that it has become known the auto industry has been surreptitiously installing them in some motor vehicles.

Americans intrinsically understand that computerized data collection and aggregation are the tools of the modern police state. Although the police state was renamed the national security state after 9/11, the collection and compiling of information about individuals -- and the motives of people associated with it -- remain suspect. As they should.

  • Bill Bodden (unverified)

    I believe a case can be made for a mileage tax because the more miles motorists drive the more they cause wear and tear to the highways. However, I would add a proviso that the mileage tax, if implemented, be combined with a weight factor. Clearly, a Prius or other relatively lightweight car would not damage roads as much as Hummers. So, to use numbers solely for illustrative purposes, we could tax a Prius or a Neon at, say, one dollar for a hundred miles and a Hummer or Expedition at ten or more dollars per hundred miles. Possibly, this could correspond to similar revenues for a gasoline-based tax.

  • Robert Huffman (unverified)

    It seems to me that gasoline burned is probably a good proxy for wear and tear, so a gas tax is probably a good way to raise highway funds. Unfortunately, so many Americans think gasonline is already priced too high that our politicians are talking about how they can reduce gas prices instead of how they can reduce our oil consumption.

    So, instead of getting a straightforward, fair, and easy-to-implement gasoline tax, we'll get some sort of bogus mileage tax, with all sorts of tax breaks tacked on. And you can bet the tax breaks won't go to the people who are trying to reduce oil consumption: they'll go to the folks with the best lobbyists. Sure, they'll throw Prius owners a bone, but they'll probably throw trucking firms and SUV-driving soccer parents a much bigger one.

  • (Show?)

    I still can't figure out how they intend to implement a mileage tax that a) taxes non-residents while they drive in our state, b) doesn't tax residents when they leave the state, and c) doesn't require them to track our whereabouts via GPS.

    I'm with Robert - a gas tax is a good proxy for road use and pollution caused. It also doesn't require the massive privacy violations that a mileage tracking system would.

  • Kent (unverified)

    This is just an UNBELIEVABLY dumb idea. How bad is it? Just off the top of my head here are a few reasons:

    1. Within days of passage savvy entrepeneurs will have designed GPS jamming devices and have them for sale on ebay. GPS works off a simple radio signal from satellites. It would be a trivial engineering exercise to build a portable device that could be installed in a car to block the incoming GPS signals and therefore keep the GPS odometer at zero no matter how much you drive.

    2. Out-of-state drivers and truckers would get off without paying tax if they didn't have the units installed.

    3. The implementation and maintenance costs would be astronomical. Who's going to install and repair the millions of units? What happens when your GPS unit goes on the fritz? Does the state pay to repair it? How long will you need to wait in line to get your unit repaired? Will it take a week? How long will your car be out of service in the repair facility?

    4. The enforcement costs will be astronomical. The law will need to have penalties for drivers who operate their vehicle with a non-functioning GPS tracker. Absent such penalties, tax evasion through disabling of GPS units will be widespread. Some people will just use a wire cutters to snip the power, others might use a hammer. But it won't be difficult to kill one of these units.

    5. Every dollar spent installing and maintaining these units in cars and gas pumps is a dollar that could have gone towards actual transportation needs. It's a massive waste of money just to provide Republican legislatures with a figleaf to avoid raising the gas tax. And for that matter, why does anyone think that that anti-tax croud will be more likely to sign off on this more intrusive and expensive scheme? I think they'd be less likely to approve it over a traditional gas tax increase. Especially when there is nothing at all wrong with the existing gas tax. It is actually a more efficient way of taxing than GPS since it encourages conservation.

    6. GPS doesn't just track time and location, it also tracks speed. Does anyone think the public will agree to having a device installed in their cars that not only has a complete record of everywhere they've been, but also of the speed they were driving at every moment? I hardly think so.

    7. Law enforcement will immediately want to get their hands on the GPS data. Not just for traffic accidents and that sort of thing. But every time there is a crime committed anywhere they may want to know which vehicles were in the vicinity. to locate both whitnesses and suspects. The privacy implications are pretty problematic.

  • Bill Bodden (unverified)

    Obviously, the gas tax is the best way to raise revenues for highways, but as long as lobbyists for the trucking industry write the provisions for gas tax bills, the voters will not approve them. My point (above) was that if a mileage tax is to be used, there needs to be a weight component to ensure fairness; otherwise, owners of small cars will be paying the same as owners of gas-guzzlers that are doing the most damage.

    As for the technological problems presented by a mileage tax, I would make two points: One is that history shows that most technological problems can be resolved, and the other is that a GPS system is not the only one that can be used.

    Without addressing all of the points made above, here is a relatively simple solution. Add a form to the state income tax form requiring people to list all their vehicles and the odometer readings for January 1 and December 31 then charge a mileage/weight tax for miles driven. There would be a measure of trust in this case, but cheaters would find a day of reckoning when they tried to sell their cars which would require a DMV verification of the odometer. If they claimed they only drove 10,000 miles for the first three years then tried to sell a vehicle in year four with a reading that showed a total of 100,000 miles then they would have to pay a mileage/weight tax for 70,000 miles for the final year. Given the human capacity for cheating, no doubt a few people would try to beat the system and might do successfully, but most people are afraid of getting caught and would be more or less honest. If they drive out of state then they can claim a reduction with proof of having been in other states.

    As for out-of-state operators, they could in most cases fill up before entering Oregon and drive through the state without stopping at a gas station. If they drive around the state and have to fill up in Oregon, they will most likely get nailed for exorbitant taxes when they pay their hotel bills. If they get a break on road taxes, Oregon can write that off as an incentive to be a tourist and boost the economy in other ways.

  • kent (unverified)


    You're falling into the fallacy of thinking that most highway costs are a result of automobile wear and tear. In point of fact, most highway construction is due to three things, none of which are really due to wear and tear from cars:

    1. Growth and increased traffic. Most of the major transportation projects in urban areas are due to growth.

    2. Modernization. Highway standards are constantly changing and improving. A lot of the construction around the state is simply the upgrading of obsolete roads...straightening, widening, better shoulders, improved surfaces etc.

    3. Age. Bridges have a planned life span and eventually need to be replaced or rebuilt. It has less to do with wear and tear from cars and more to do with age and weather.

    All of these tax ideas really strike me as solutions in search of the problem. The gas tax is already the most elegant and simple form of user tax available. It strikes me as naive in the extreme for transportation advocates to think that passing some complicated new tax like a mileage tax will be politically easier than raising the gas tax. Both the GPS mileage tax and the annual income tax form suggested above are far more intrusive than the existing gasoline tax which no one ever actually sees.

    The problem is not the type of tax, it is the general resistance to tax increases by a significant portion of the population. Inventing some new form of taxation does nothing to address that core problem. In fact it's probably the dumbest approach politically. Imagine what would happen if an unpopular GPS-based mileage tax were approved by the legislature. I bet within a week you'd see a new initiative filed and anti-tax activists out collecting signatures to repeal it. In fact, the whole Gray Davis recall and Terminator governorship in California was probably due as much to unpopular car taxes as anything else.

  • (Show?)

    I think the best argument is that this is a tax on rural residents. Often taxes exempt categories of citizens for inadvertant or intentional reasons; putting a heavier burden on some is another thing altogether.

    I have long felt that low gas taxes are a subsidy to polluters--in this case they're called "voters." We created a monster for ourselves by making car-driving so cheap through low taxes. But we have to pick up those charges elsewhere--through a vast network of roads, hugely dangerous emissions (a bill due sometime later this century--with brutal interest), and the failure to create transportation systems not dependent on more roads.

    It would be great to see a pilot program that didn't just shift costs, but actually promoted reduced fuel use and/or alternative transportation.

  • Norm Maxwell (unverified)

    What about motorcycles? From a technical standpoint, I can't imagine how you would install a Big Brother tracking device on one. Furthermore, MCs weight a fraction of what a car does and so presumably causes minimal wear on our highways. People should be encouraged to ride rather than drive and it makes no sense to punish motorcyclists with a milage tax. Down with Big Brother! Norm

  • Norm Maxwell (unverified)

    What about motorcycles? From a technical standpoint, I can't imagine how you would install a Big Brother tracking device on one. Furthermore, MCs weight a fraction of what a car does and so presumably causes minimal wear on our highways. People should be encouraged to ride rather than drive and it makes no sense to punish motorcyclists with a milage tax. Down with Big Brother! Norm

  • Jay (unverified)

    One of the reasons for the transportation budget short-fall not mentioned is that the gas tax isn't indexed to inflation, whereas road construction (and everything else) is.

    The question I have is who is really behind this solution in search of a problem?

    I'm so jazzed abotu gas taxes, I think the gas tax should be the ONLY method of supporting ALL transportation related expenses (e.g. highway patrol, DMV...) If driving cost what the true costs were, busses wouldn't need subsidies.

  • (Show?)

    I'm with Norm on the motorcycle argument, and Jeff alludes to the fact that highways and auto transportation in general are massively subsidized. Air traffic too is subsidized by cities and counties that host airports as well as by the feds. We don't notice this because we mostly see asphalt as another naturally occuring phenomenon unlike light rail tracks, because we grew up with one and not the other.

    Let's stick with the gas tax and maybe reconnect funding for the State Police while we're at it.

    Side rant........Some of us can still remember when the Oregon State Police was one of the best funded and most professional law enforcement agencies in the nation.

  • Steve Bucknum (unverified)

    I will be more than happy to pay my milage tax provided two conditions exist:

    1. The concerns that Kari expressed earlier about taxing out of staters traveling in Oregon, not taxing me when I'm not in Oregon, and doing this without a GPS get resolved.

    2. My alternative transportation be provided to within one mile of my front door. Please bring Portland's Max line to Prineville, with connections to Salem, Eugene, Pendleton, Fossil, Mitchell, and the Prineville Reservoir so that I have a CHOICE about whether to drive or not.

    Until those two tiny things get resolved, its revolution before unfair taxation. (You think those of us east of the Cascades get hot about land use and environmental issues, just try this out!)

  • Wayne Kinney (unverified)

    I'm pretty sure the folks who thought this up didn't mean this, but it does amount to a rural tax. I now live in the bustling city of Bend, but there isn't any more of a public transporation system here than what they have in La Grande, or for that matter, nearly part of rural Oregon. People in rural areas have to drive lots of miles for nearly everything -- in some places, the nearest pharmacy is 50 miles away, let alone a doctor or hospital. It's hard to fathom the distances between places and services out here unless you live it every day. You don't really learn that by coming out to the Steens or Wallowa Lake once in a while. Try living in Burns or John Day and needing pants, or a battery for your camera, or memory for your computer. If you can't find them there, you can try Ontario, 140 miles away. If you can't find it there, Boise is another 60 miles. When people out here leave town, they have a shopping list -- sometimes, they have a list from their neighbors as well. When I lived in La Grande, the nearest place I could get glasses under my health plan was Kennewick, Wash. -- 120 miles. If you live in Fossil, you've got a 20-mile drive to the pharmacy in Condon, and a 50-mile drive to the hospital in Heppner. I try to compensate for my lots of time on the road by driving a car that gets 30-35 mpg. I can't justify driving a pickup or SUV from Bend to Ontario, but there are times my back wishes I had a bigger car. What I'm wondering is this: What are all those pickups doing in Portland? They can't all be folks from Eastern Oregon heading to Fry's! Can't we have a special road tax for metro folks who own huge pickups or SUVs?

  • Paul (unverified)

    Number 1, the mileage tax is not about raising money for roads, it is about tracking and tracing us. Number 2, states are recording record amounts of money in their coffers. Check the CAFR reports for your state. Just google your state + CAFR. Number 3, go to Alex Jones website to see how big a scam this really is.

  • (Show?)

    One thing people forget about when they complain about other states having more money to spend on roads is our low vehicle registration renewal costs.

    When I moved to Oregon I was absolutely shocked to learn that a 2-year sticker for my license plate and the vehicle inspection would only cost me around $50.

    This is a pittance in comparison to what I paid in Texas.

    There, the cost to renew your registration annually (yes, we do it every year) is based on the type of car you have and the year. There are then various fees placed on the registration by the county to help pay for local roads/bridges (ranges from $5 to $11.50).

    The following are the annual costs, not including the added county fee:

    MODEL YEAR OR WEIGHT IN POUNDS...................FEE 1999 AND OLDER MODELS............................$40.80 2000, 2001 AND 2002 MODELS ......................$50.80 2003 AND NEWER MODELS............................$58.80 6,001 LBS. AND OVER..............................$25.00 PLUS 60¢ CWT PLUS 30¢ (irrespective of model year)

    Then you have the safety inspection-- something Oregon does not do. Your vehicles headlights, brake lights, brakes, front seatbelts, windshield wipers, etc. are tested to ensure they work. This costs $12.50 for one year ($21.75 for two).

    Then, if you live in the most populous areas of the state you have the emissions test. The prices vary depending on which tests are required, but you can see for yourself that they are higher than Oregon.

    So if you live in a populous area, your cost per year could be close to, or over, $100 per year to renew your registration and have the required inspections.

    Much of this money goes to Texas' roads. If you've ever visited the state for any length of time, you've probably noticed the highways & freeways are constantly being worked on. They are also regularly adding more roadways and bridges.

    Everytime I hear someone here complain about how "expensive" it is to renew vehicle registrations here, I laugh.

    Until we get a state legislature that makes sure the money is spent correctly, and people willing to pay for their roads, our bridges and roads will continue to crumble.

  • Betsy Imholt (unverified)

    Russell Sadler’s piece titled, “The Mileage Tax: Coming Soon?” contains several inaccuracies regarding Oregon’s Road User Fee Pilot Program. I’d appreciate the opportunity to address Mr. Sadler’s and others’ concerns expressed on this website—knowing Oregonians want to rely on facts when making decisions. I’m Betsy Imholt, administrator for the Road User Fee Pilot Program.

    First, let me explain why the Oregon Department of Transportation is conducting the test in the first place. Oregon is researching possible replacements to the gas tax to prepare for the day when a substantial number of motorists are driving highly fuel efficient vehicles and no longer paying enough gasoline taxes to support the road system. With rising oil prices and more people buying the new technology vehicles, that day may come about ten years or more from now. No one in Oregon proposes immediate implementation of a mileage fee or any other program to replace road revenues. We’re just exploring options right now.

    Why? Because Oregon does not want to wait until our road funding is in crisis. Our pilot program is the result of a 40-month effort to review replacements to our state’s gas tax revenue. The state is seeking an acceptable and viable revenue source, funded through “user pay” methods, to maintain, preserve, and improve Oregon’s state, county, and city highway and road system.

    Perhaps the most misunderstood aspect of the pilot program is Sadler’s comments that ODOT has the capability to track vehicles. This is not true. When developing the technology used in the pilot program, ODOT was instructed by the Task Force overseeing this study to protect Oregonians privacy. The road user fee program does not track, store, or collect private information. You can go down to your local sporting goods store and purchase a GPS navigation device and know one knows where you are. The technology being used merely counts miles traveled in each zone (in Oregon & out of Oregon), not the particular time of day, location in the zone, or even what day. It is incapable of “tracking” motorists.

    It is important to know that if a mileage fee were to ever be implemented in Oregon that the Legislature would set the rates. There are several scenarios and policies to take into account including rural/urban issues, environmental issues and social equity issues. Since the Legislature would set the rate or rates for a mileage fee it is impossible to know who would gain and who would lose at this point. ODOT is simply testing the technology to see if it can be done.

    Sadler also implies that heavy SUVs and pickup trucks do more damage to roads than regular passenger vehicles. In fact, the state’s cost responsibility studies have shown that all passenger-type vehicles, including SUVs and pickups, do about the same damage to roads. Roads are built for 50-ton trucks whose operators already pay by weight. Therefore the differences between a 3,000-pound car and an 8,000-pound large SUV are extremely slight at best. However, if the Legislature wanted to create different rates for different vehicles, that would be an option. As noted above, the ultimate structure of the rate for the mileage is not yet determined and is a matter for the Legislature.

    Other writers to this blog have raised several points that I’ve addressed below:

    • How fees would be collected on out-of-state vehicles. The answer is simple: those motorists would continue to pay the gas tax at the pump instead of the new road-user fee—the rate-per-mile is calculated to be the same on average as the gas tax—until, that is, the other state adopts a compatible mileage fee.

    • Isn’t the current gas tax is working fine? In fact, financial modeling shows a significant future decline in revenue based on the gas tax and that in the near future, it will no longer provide adequate funding for roads—at a time when our population is booming and road usage is at an all-time high. The original purpose of the gas tax (when it was established in Oregon back in 1919—the first state to do so) was to raise money for roads. Everyone relies on goods moving safely and quickly. To repair, maintain, and build new roads, we must have adequate revenue, and most people agree that those who use the roads should be the ones who pay for them.

    • The road user fee is a road tax, not an environmental tax, but could be designed for both. Since all passenger vehicles have about the same impact on roads, all these vehicles should pay the same for road usage. However, because Oregon values its environment, the road user fee program could encourage use of environmentally-friendly vehicles by charging a higher per-mile fee for vehicles that get less than a certain number of miles per gallon, and this added charge could be considered an “environmental tax” and used for other purposes.

    • The road user fee would replace the gas tax (not be an addition to it) and funds would be used for the same highway projects as the current gas tax. Oregon’s road user fees would not go into the state’s general fund and, in fact, cannot because of constraints in the Oregon Constitution.

    • The road user fee is a pilot program. We’re testing a program that has many options and can change. If someone has a better idea, we’re open to hearing it.

    Information on the Road User Fee Pilot Program can be located at:

  • Steve Bucknum (unverified)

    Thanks to Betsy for the detailed comments.

    I just don't understand given all that why you'd spend State money testing something that common sense tells you won't work.

    I'm still waiting for that MAX line to come within a mile of my front door. Working on that Betsy?

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