Tuesday, 22 January 2013

Oregon progresses pilot of vehicle mileage tax

The State of Oregon has long been seen to be the US leader in distance based road usage charging, also seen by others in North America as VMT (Vehicle Mileage Tax) or MBUF (Mileage Based User Fees).  

TV station KMTR reports on its website (with TV footage) about the Oregon Department of Transportation (ODOT) pilot programme involving 50 people paying per mile.  

It is part of its efforts to develop a system so that vehicles not powered by fossil fuels or that are, but are very fuel- efficient (e.g. hybrids) pay a fair share of the costs of using the roads.  The concern is that the US$0.30/gallon (US$0.079/litre) gas tax (state not federal gas tax), which is mostly hypothecated to road spending, is unsustainable as the vehicle fleet transitions away from conventional engines.  The fear is a 25-60% reduction in revenue over 25 years.

Oregon projections of eroding fuel tax revenue

The pilot involve the 50 participants being billed US$0.0156 c/mile (US$0.009 c/km) based on their mileage being measured by different means.

The options available include:

- A state provided option of a mileage measurement device (could be odometer) that measures all distance regardless of location (including out of state);
- A state provided option of flat pre-payment of US$45 a month (equal to over 2,500 miles a month);
- A private service provider option of paying miles accumulated per month as measured by basic means (i.e. odometer), but with more payment options than the state option.
- A private service provider offered option with an onboard unit incorporating GPS, to identify when a vehicle is out of state or driving off of public roads (and so not liable for VMT);
- A private service provider offered option with a smartphone based application, providing a similar service.

If successful, and the legislature agrees, then from 2015 all new vehicles in Oregon with an Environmental Protection Agency estimated  fuel efficiency of 55m/gallon or higher will be required to pay the VMT.

Those vehicles that get an estimated 55mpg or higher that do use fossil fuels, would still pay the gas tax when filling up, but would get a refund based on their mileage driven and the vehicle efficiency rating, which is interesting, but presumably is a way of not over-refunding.  Bear in mind that the VMT tax rate for the pilot is very low, and will need to be higher over time to be commensurate in value to the gas tax.

The pilot ends in February 2013, so it will be interesting to see what the conclusions will be.  A report to the legislature is due out in February, and a complete evaluation report will be released later this year.

ODOT has a website about the pilot project outlining the details and reports behind the programme.  There is even a blog set up so participants can write about their experiences.

The excellent frequently asked questions section includes comments that ODOT has been replying to.

Comment

Oregon remains at the forefront of developing a future source of revenue from road vehicles in the US. The efforts are focused on the most fuel efficient vehicles (and those that don't use taxed fuels), and are based on the philosophy of choice, with both state and privately provided options to pay.  Having no compulsory GPS unit, and not state provided GPS unit are both important for privacy, with the option to simply pay a flat fee every month or to pay for mileage recorded by means that do not include GPS.  The concept is one of “User Choice” to select the means to report the mileage and the agency the user trusts to do so. Certified Service Agents are part of the overall system concept to help provide privacy protection and lower operating costs.  That is a testament to Jim Whitty, the Office of Innovative Partnerships and Alternative Funding Manager, who has been leading these efforts for some years.

Disclaimer - I worked on this project for D'Artagnan Consulting.

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