States Weighing Charging Drivers By Mile As Revenues Plunge

States are proposing new ways to generate highway revenue due to plummeting tax dollars coming into coffers from the traditional source. Biden’s inflation, fuel efficiency of newer models and electric vehicles (EVs) have governments scrambling to maintain roads.

The solution? One prominent proposal out of several is charging drivers by miles driven and not by the gallon to replace dwindling highway taxes.

Different proposals include using charging stations to tax EVs and adding taxes to home deliveries. But three states, Oregon, Utah, and Virginia, already generate highway funding from road usage charges, and Hawaii is next in line to implement this new form of taxation.

The push for EVs by the Biden administration is strong, though savings for the U.S. driver are not what proponents promised.

According to a January Breitbart News report, energy inflation now means it costs consumers more to drive 100 miles in an EV than it does in a traditional gas-powered vehicle.

For more than a century, gas taxes have been used to maintain the nation’s highways. They have traditionally been seen as a way to get funding from those who use U.S. roads the most, but that is changing.

Oregon led the charge with a pilot program initiated in 2015 that had drivers attach a device to their vehicles. This created an account to record mileage data and collect taxes for distances driven.

Another program, funded through $125 million of Biden’s infrastructure package he signed in 2021, is set to be piloted on a federal level. 

Colorado launched an initiative last year adding a tax to Amazon home deliveries as well as other online retailers to support state transportation projects.

The Bureau of Labor Statistics reported a surge in domestic EV sales. 

After making up a paltry 0.1% of total car sales in 2011, that number jumped to 4.6% in 2021. Automotive manufacturers are rolling out new models seemingly weekly, and forecasts are for that percentage to skyrocket.

How much? 

S&P Global Mobility predicts that EVs will consume a staggering 40% of the market by 2030. This is clearly upsetting the traditional method for funding transportation through gas taxes, and alternatives are being considered nationwide.

According to the National Transportation Finance Center at San Jose State University, some specific proposals are gaining traction. The center conducted a survey annually since 2010. 

Institute director Asha Weinstein Agrawal cited three ideas gathering support. They are the current new system of mileage-based taxes, instituting special rates for low-income drivers, and linking taxes to pollution generated by a vehicle.