Congress continues to confront the challenge of declining revenues from the federal road fuel tax. Federal and state fuel taxes--paid at the pump on each gallon of gas or diesel--have provided most of the funding for U.S. highway construction and maintenance and, more recently, have supported transit investments as well.
But increasing fuel efficiency and the rise of alternative fuel vehicles that do not use gasoline have led to growing shortfalls in federal and state funding for surface transportation programs--shortfalls that are likely to become even more acute in coming years.
As a result, some state and federal policymakers have begun to explore a shift from taxing fuel to taxing a vehicle's miles of travel instead. Would a smooth transition be possible?
A RAND primer presents decisionmakers with a short, easy-to-understand guide that outlines the potential advantages of such mileage fees, core challenges in replacing fuel taxes with mileage fees, and recent innovations that states are exploring in mileage-fee pilot tests.
Beyond providing a fair and more sustainable revenue source, mileage fees could also help to reduce traffic congestion, harmful emissions, and excessive road wear; improve driver experience through technology-based navigation, safety, and cost-saving features; and collect travel data to support better planning and operations.
However, transitioning from taxing fuel to taxing miles of travel raises two key challenges: minimizing the administrative costs of collecting mileage fees from tens or even hundreds of millions of drivers, and addressing public resistance to mileage-fee collection, including privacy-related concerns. To help policymakers meet these challenges, RAND drew on recent state and local mileage-fee trials and studies and developed this primer, which offers strategies for reducing cost as a percent of revenue (either by increasing system revenue or by decreasing system costs) and fostering public acceptance.
Read the report: Mileage-Based User Fees for Transportation Funding
A Primer for State and Local Decisionmakers
View the video: Mileage-Based User Fees for Transportation Funding
Read the commentary: Getting Over the Privacy Hurdle to Mileage-Based Road Fees
View the Congressional Briefing: A New Way to Pay for Transportation: Exploring a Shift from Fuel Taxes to Mileage-Based User Fees
Read the research brief: Moving Toward Vehicle Miles of Travel Fees to Replace Fuel Taxes: Assessing the Path Forward
Please don't hesitate to contact me at (703) 413-1100, ext. 5423 or Laura_Patton@rand.org if you want additional information from RAND, would like to speak to a researcher, or have any questions.
(703) 413-1100 ext. 5423