Replacing the fuel tax with a mileage-based user fee?

The wheels may be in motion for a big change for Georgia taxpayers.

For decades, Georgia has paid for its roads, bridges and other transportation infrastructure with a fuel tax. The concept is simple: Drivers pay relative to the amount of gasoline they use. The evolution of the auto industry, along with some research-backed political momentum could change that soon.

The Georgia Department of Transportation plans to launch a pilot program later this year that will test mileage-based user fees: taxes that charge by miles driven instead of fuel used. The experiment seeks 150 volunteers to participate in a test of the new tax over a four-month period starting later this year.

Mileage-based user fees have become more common in the past decade, with three states – Oregon, Washington and Utah – already adopting them, and several others conducting similar studies. These changes were exclusive to states west of the Mississippi until recently, as more states on the Eastern seaboard conduct similar pilot programs and related studies.

Gasoline taxes have been around in some form for over 100 years. Recently, however, new car models have become more fuel-efficient, and drivers have gradually shifted toward electric vehicles. This trend is expected to continue for the foreseeable future. Since the gas tax is the No. 1 funding source for maintaining Georgia’s highways, its diminishing sustainability is certainly cause for concern.

The threat to revenue is apparent: Drivers using less gasoline obviously means less money from a gasoline tax. Most proposals to replace the gas tax focus on this loss in revenue, but a 2021 study from the Georgia Public Policy Foundation points out other issues that switching to a mileage-based tax could address.

For one, with Georgia’s population rising, and per-person gasoline consumption falling, the gas tax cannot be reliably assumed to keep pace with roadway needs. A bigger population means more drivers, and more drivers means more maintenance on infrastructure and widening corridors. Charging per mile helps funding keep pace with growth.

The study also asserts that the gas tax is neither transparent nor equitable. In contrast, a per-mile charge system would theoretically work more like a utility bill, paid only by people who use roadways and spent only on roadways. With proposed mileage-based taxes, users know who and how much they are paying, what they are paying for, and those who pay are the ones who benefit. Different rates might apply to interstates and expressways, which cost more to maintain, than other roadways. Rural per-mile charges could be lower.

Many researchers and advocates agree on these benefits, including those at the Reason Foundation. Reason’s backgrounder on the subject adds that mileage-based user fees give better incentives and flexibility to both drivers and transportation departments.

Yet another problem with the gas tax is that it can be regressive, placing a heavier burden on low-income and rural drivers who are more likely to drive less fuel efficient vehicles and drive longer distances.

Increasing interest in moving away from a gas tax is especially relevant to Georgia. Production is expected to begin at the new SK Innovation electric-vehicle battery plant early next year. Gov. Brian Kemp and President Joe Biden have touted the plant’s opening as a huge boost for the American EV industry, with Kemp saying Georgia will account for nearly half the nation’s non-captive EV batteries. This is expected to attract related industries and encourage increased EV use in Georgia.

The most popular criticism of switching to a mileage-based tax has to do with privacy. Charging taxpayers based on where and how far they drive means their driving must be tracked somehow. Some lawmakers and interest groups have voiced concerns over using GPS tracking, claiming it is unconstitutional or a violation of privacy.

The Georgia Public Policy Foundation and several other researchers and pundits recommend that third party private entities be used to report total miles to the government. Many proposals include the minimization of necessary data collection so that it would not exceed that which comes with any other phone application.

The Georgia Policy study concludes that state transportation policy has failed to account for declining fuel tax revenue over the past decade. Urgency in this matter will only increase as the tax’s purchasing power continues to decrease. Fortunately, there seems to be plenty of openness among lawmakers and the state DOT in replacing it in the next few years. 

A sentiment espoused by both the Georgia Public Policy Foundation and members of the DOT is that mileage-based user fees are not only a good alternative policy, but a necessary inevitability.

« Previous Next »