Moving Toward Taxing Motorists by the Mile

Other states, including Oregon, have launched pay-per-mile programs with optional participation, which have failed to generate much revenue.

Other states, including Oregon, have launched pay-per-mile programs with optional participation, which have failed to generate much revenue. Shutterstock

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Nevada will begin collecting odometer readings from drivers this fall, the first step of determining whether a "pay by mile" tax policy would work in the state.

Drivers in Nevada will begin submitting their odometer readings to the state this fall as part of a pilot program aimed at informing future infrastructure decisions.

The program, established in a law passed by the Nevada Legislature, will give lawmakers information on the total miles that drivers travel in the state each year, data that could be used to establish a “miles-traveled” tax that would help fund road projects in lieu of the state’s existing fuel tax.

Both the federal government and state governments use fuel taxes to pay for road construction and repair projects. Drivers pay 18.4 cents per gallon to the federal government, and varying amounts to whatever state they live in. In Nevada, that tax is 33.8 cents, which generated $210.6 million in revenue for the state in 2018.

But over time, that funding model has failed to keep up with demand, partially due to the rising costs of construction and partly due to the introduction of increasingly efficient cars. Taxing drivers based on the number of miles they travel is a potential solution, but implementing that type of system requires significant data. Assembly Bill 483 is an attempt to collect that information, according to Nevada Assemblyman Howard Watts.

“We need more data on the miles that are traveled by vehicles in the state currently,” he said at a March committee hearing on the bill. “This bill addresses the data piece of that puzzle.”

The pilot, which begins in October and runs through the end of 2026, directs officials with the state Department of Motor Vehicles to collect odometer readings when motorists sell or register their cars (registration renewals will also be included). Motorcycles and mopeds are exempt, but mileage is required from every other vehicle, including cars (gas and electric), trucks, buses and RVs.

There are no fees involved with the program and no penalty for not complying with it. The data “will be used only to compile reports of total miles driven for the Nevada Legislature,” according to the Nevada DMV.

“We’re making the process as efficient as possible,” Julie Butler, director of the state agency, said in a statement. “Just remember to write down your mileage before you get started. The DMV’s online services and kiosks will accept readings and we encourage everyone to continue using them.”

Nevada is one of multiple states considering new ways to pay for road projects. For example, earlier this year Washington state completed a 12-month pilot project that recruited 2,000 volunteers to test a mock pay-per-mile system and give feedback on how the change affected them. Participants could choose from a variety of mileage reporting options, including self-reporting and phone apps. A report detailing those results will be submitted to the governor, the state legislature and the federal Department of Transportation early next year.

Oregon launched a statewide pay-per-mile system (OReGO) in 2015, but allowed residents to decide whether to opt in. Participants pay 1.7 cents per mile and receive an account credit for fuel taxes paid at the gas pump, then receive regular statements for their road usage, with the fuel tax credit already applied.

Oregon lawmakers capped participation in the program at 5,000, but only 611 people had signed up as of June, state DOT officials said.

“People who stand to pay the most tax are not going to sign up; you can’t have a voluntary tax program,” Michelle Godfrey, a spokeswoman for the Oregon Department of Transportation, told The Daily World. “It has to be a mandatory program for revenue to be gained from it.”

Kate Elizabeth Queram is a Staff Correspondent for Route Fifty and is based in Washington, D.C.

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