The Mileage Fee: Benefits and Challenges
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The law authorizing money for roads and transit projects, the Highway Bill, expires at the end of the month. Extending the bill through the rest of the calendar year could cost about $11 billion under one proposed congressional plan. As shortfalls from federal and state fuel taxes grow, Congress will continue to confront questions of how to pay for such an extension. To answer these questions, some state and federal policymakers have begun to explore a shift from taxing fuel to taxing a vehicle's miles of travel instead.
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: (1) minimizing the administrative costs of collecting mileage fees from tens or even hundreds of millions of drivers, and (2) 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.
More RAND Work on Mileage-Based Fees
Read the commentary: Getting over the Privacy Hurdle to Mileage-Based Road Fees »
Watch the Congressional briefing »
Read the research brief »
Please don't hesitate to contact me at Laura_Patton@rand.org or at (703) 413-1100, ext. 5423, for additional information from RAND, to speak to a researcher, or if you have any questions.
Legislative Analyst for RAND Terrorism and Homeland Security; Public Safety; and Transportation & Infrastructure
(703) 413-1100 ext. 5423