From Fuel Taxes to Mileage-Based User Fees: Rationale, Technology, and Transitional Issues


David Coyle, Ferrol Robinson, Zhirong Zhao, Lee Munnich, Adeel Lari

August 2011

Report no. CTS 11-16

Two national commissions established by the U.S. Congress recommend replacing the current system of funding transportation based on fuel taxes with a new distance-based system of user fees. The State of Oregon has done a pilot project demonstrating a system for transitioning to mileage-based fees by paying the fees at the gas pump. The University of Iowa has conducted pilot tests around the country to determine how drivers respond to a mileage-based fee approach using GPS-based technology. The Puget Sound Regional Council has conducted a test of congestion tolling. Finally, the Minnesota Department of Transportation is testing an approach for collecting mileage-based user charges using commercially available smartphones with built-in GPS devices, in which the charge element is just one of the applications. While there have been discussions among many transportation leaders regarding why fuel taxes are no longer a good way of funding the transportation system, there is by no means a public understanding of why this is so. The public assumes that the taxes they pay at the pump are paying for the system, and that if funding problems exist, they are due to waste and inefficiency. This examination--of the rationale, technology, and transitional issues in shifting from a financing system for surface transportation based on fuel taxes to one that is based on a mileage-based user fee (MBUF) traveled or vehicle-miles traveled (VMT) fee--sets the stage for a policy discussion on transportation-related user fees and lays the groundwork for an extensive public outreach effort.

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