Mineta Transportation Institute: What is the Financial Impact of Switching from Fuel Taxes to a “Road User Charge”?

Mineta Transportation Institute: What is the Financial Impact of Switching from Fuel Taxes to a “Road User Charge”?

November 20, 2015  | Elizabeth Bastian

Last week, Christopher E. Ferrell and David B. Reinke of the Mineta Transportation Institute released a report titled “Household Income and Vehicle Fuel Economy in California,” comparing the financial impact of switching from a fuel tax to a “road-user charge” (RUC) based on vehicle miles traveled (VMT) for funding transportation infrastructure.

Using the 2010-2011 California Household Travel Survey (CHTS) and the EPA database on vehicle fuel efficiency, the team analyzed households by income group and area type (urban or rural), with their current driving habits as a base. There were three main findings from the study.

Screen Shot 2015-11-19 at 10.02.03 AMFirst, daily household fuel consumption and vehicle-miles traveled (VMT) both appear to increase with household income. Second, urban and rural households show roughly the same amount of fuel consumption and VMT. And finally, although the analysis found the estimated costs of either program would be slightly different for different income groups and for rural versus urban households, it found no statistically significant difference in cost between the two programs in any income group.

In terms of revitalizing the HTF, this study does not have a clear policy agenda. Supporters of a VMT-fee based funding mechanism for the HTF would suggest that such a fee would likely not raise the cost of maintaining and owning a vehicle, but opponents would likely say the same thing. The HTF needs to increase its source of income, not maintain it, as the current annual amount of revenue going into the HTF is what has led to its insolvency. This does not rule out VMT-based funding sources, but it does hint at the need for a wide range of multiple funding sources.

Though more research needs to be done to determine if the statistical difference does not exist, the study described within the report provides new data to consider when developing a new funding mechanism.

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