Oregon Looking to Replace Gas Tax With a Pay-Per-Mile Program

Tue, 6/26/2018 - 7:35 pm by Kirsten Rincon

With the average fuel economy of new vehicles rising constantly over the past couple of years, many states around the country have been seeing a significant drop in gas tax revenue, contributing to the continuing declines in road quality. Oregon is one of the states that are having trouble financing road construction and maintenance due to decreased gas tax revenues, which has prompted lawmakers to think about an alternative way to generate funds for improving the state’s crumbling infrastructure.

The Oregon Department of Transportation has decided to launch a novel road usage charge program, aimed at boosting transportation funding, by having vehicle owners pay extra fees for the miles they drive, instead of the amount of fuel they purchase. The first-of-its-kind program in the United States, dubbed OReGO, aims to replace the traditional gas tax with a per-mile fee, which is expected to help make up for the tax revenue loss, but also faces a lot of criticism from those who own fuel-efficient vehicles.

The pay-per-mile program will launch July 1, 2015, allowing up to 5,000 people who own a car or a light commercial vehicle to participate, paying 1.5 cents for each mile they travel, and receive a rebate check to make up for the money they spent on fuel taxes for the miles traveled, which they will still have to pay for when buying gas at the pump.

The Department of Transportation will install digital devices into the cars of those who volunteer to participate in the program, that will keep track of the number of miles they have driven, in order to calculate how much car owners should be reimbursed at the end of each month.

While this kind of program might seem like the only logical solution to the problems resulting from reduced gas tax revenues, it also seems to be a bit unfair to owners of electric and hybrid vehicles. Electric and hybrid car owners pay a premium when purchasing one of these green vehicles, but on the other hand, don’t contribute to build and maintain roads and bridges, or contribute very little, in the case of those driving a hybrid. But, they contribute to reducing air pollution, which is why they receive rebates and tax credits from the state and from the federal government when buying an electric or a hybrid car. Up until now, they have not been paying gas taxes, which is one of the incentives motivating them to pay a couple of thousand dollars more to buy an alternative fuel vehicle. Now they feel that introducing a pay-per-mile program is discriminating towards them and that it would deter a lot of people from buying electric vehicles.

Those who own a conventional car, for their part, believe that it would only be fair to make electric-car owners pay for the roads they use, considering the growing number of electric and hybrid cars on the road. That’s the general opinion that prevails among Oregon policymakers, as well, and it seems that no matter how strongly EV owners oppose the pay-per-mile program, it might get the approval of the general public, which is in favor of the road usage charge principle.