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PHOTO CAPTION: Nissan LEAF recharges at Oregon public charging station.

Oregon Launches Pilot Pay-by-Mile Tax Program

The next pay-by-miles-driven tax scheme will cost each car owner $180 a year based on driving 15,000 miles annually.

Published: 30-May-2015

Raising the state tax on gasoline in Oregon from 24¢ a gallon to 30¢ apparently isn't enough to keep the road repair coffers full, not with more and more of its citizens opting to drive hybrid, plug-in and all-electric cars. A decade ago, there were 8,000 hybrids registered in the state. Today the number is over 68,000. Now that's just 2% of the 3.3 million cars in the state, but since they typically get 50-100% better fuel economy, or put another way, buy a lot less gasoline than non-hybrids, the feeling in state legislature is, owners are paying their fair share of road costs.

E-drive car owners will, of course, argue they pay more for the technology and pollute less than their gas-only neighbors, so it works out. But the handwriting is on the wall in Washington, as well as Salem. Cars are slated to become increasingly more efficient, using less fuel, paying less in fuel excise taxes that fund the national Highway Trust Fund, as well as local state road repair funds.

The answer, it is argued, is to tax drivers not on the amount of fuel they buy and burn, but on the miles they actually drive; and Oregon is the first state to implement such a program. Starting with 5,000 volunteers who agree to place a mileage logger in their vehicles, the state will bill them at a rate of 1.5¢ per mile driven. The program, called OreGo, is open to all types of vehicles, not just hybrids or electric cars, but there are limits to enrollment. No more than 1,500 vehicles in the less-than-17mpg category can participate, while another 1,500 are limited to those getting more than 17 mpg but less than 22 mpg. Previously, Oregon has tried two small, GPS-based programs.

The OreGo program will cost the state an estimated $8.4 million. In terms of the 68,000 hybrid car owners in the state, the pay-by-the-mile fee would equate to around $180 annually based on 15,000 miles annually. In terms of a gasoline car owner, that equates to about 600 gallons of fuel, which at 30¢/gallon state fuel tax, is comparable to 14,400 miles of driving at 25 mpg.

Eventually applied across all the cars and trucks registered in the state, the pay-per-mile tax would raise nearly $750 million annually, based on an average of 15,000 miles per year.

Oregon isn't the only state serious considering the new fee. Legislators in Arkansas are talking about following suit with their own 1.5¢ per mile fee. The question is, what happens to current tax on gasoline? Won't drivers, other than plug-in and all-electric car owners, be double taxed?

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