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INFORMATION TECHNOLOGY & INNOVATION FOUNDATION

Written by Robert D. Atkinson

A national “road user charge” system would ensure that everyone who drives on America’s roads contributes their fair share of the infrastructure costs.

Key Takeaways

• As cars and trucks become more fuel efficient and electrified, gas taxes are becoming unsustainable as a way to pay for America’s surface transportation system.
• An RUC system would solve that problem by using technology to log miles traveled and charge vehicles accordingly. It would collect adequate revenues from highly fuel-efficient vehicles and implement pricing based on actual costs imposed on the system.
• Opponents have voiced a number of concerns with the concept of an RUC system, from privacy issues to the share of costs rural drivers would pay. But a careful analysis reveals the lion’s share of these concerns are either overblown or wrong.
• Congress should pass legislation to establish a national RUC system and include a transition period for automakers to adjust to the technology and for DOT to develop a national payment system.

Overview

It is time for Congress to implement a national road user charge (RUC) system to pay for the nation’s surface transportation system. As the congressionally mandated National Surface Transportation Infrastructure Commission stated in its final report to Congress, the ideal funding “framework should cause users and direct beneficiaries to bear the full cost of using the transportation system to the greatest extent possible.” And to do that, the commission endorsed an RUC system. While many states are now implementing RUC pilot programs, a national program requiring all new vehicles and all heavy trucks to pay through an RUC system is the only way to effectively implement such a system.

This report first describes what an RUC system is and summarizes the benefits of a national RUC system that states could opt in to. It then reveals the most common concerns about an RUC system to be either overblown or wrong. These concerns include:

• Privacy: An RUC system actually is more privacy-protective than tolling systems, because no information other than charges are passed onto governments.
• Rural Drivers: When it comes to differential effects on rural and low-income households from an RUC system, rural drivers actually would fare better under an RUC system than under a gas tax.
• Environmental Impacts: Some object to an RUC system over fears of its ability to charge electric vehicles (EVs) reducing EV adoption and hurting the environment. But a revenue-neutral RUC system actually would lead to a reduction in vehicle miles traveled, thereby helping to decrease carbon emissions.
• Double Taxation: Some worry that an RUC system will lead to double taxation or increased taxes overall. But an RUC system could be designed such that drivers do not have to pay a gas tax. And any system—whether an RUC system or a gas tax—can be used to increase, decrease, or maintain the amount of revenues currently being raised.
• Travel Diversion: Some argue that pricing roads would divert trips to non-priced roads, but an RUC system is actually the solution to that problem because it prices all roads.
• Administrative Costs: Some argue that an RUC system would be expensive and complicated to implement. But the fact that new vehicles today are the equivalent of “mobile smartphones”—highly sophisticated and connected electronic systems— implementing an RUC system on this “platform” should be relatively easy and inexpensive.
• Trucking Industry: The trucking industry generally opposes an RUC system, particularly one related to truck weight. However, their arguments against it—save one—are either wrong or overblown. Their argument that an RUC system could lead to higher charges on trucks is valid, precisely because trucks now impose more costs on the system— particularly pavement damage—than they pay in taxes and fees, and an RUC system could be designed to make trucks pay not only by the mile but by axle weight and the type of road they are on, thereby increasing net economic welfare.

In short, most of the concerns raised against a road user charge system are overblown or simply mistaken. Moreover, as a “technology platform,” an RUC system would enable a new range of services, including pay-as-you-go insurance, easy parking payments, congestion pricing, and more private provisioning of roads—all of which would improve the performance of the overall U.S. surface transportation system. As such, a road user charge system is a solution whose time has come.

To move forward, Congress should pass legislation directing the U.S. Department of Transportation (DOT) to take the lead in establishing a national RUC system that utilizes the Global Positioning System (GPS) and includes both passenger vehicles and commercial trucks. Passing legislation to implement a national RUC system would require a transition period of at least three to five years as automakers develop a standard for the RUC technology—and as DOT funds the development of a national payment system. During this period, electric-vehicle adoption will grow, further weakening the gas tax as a sustainable funding method for the highway trust fund.

What Is Road User Charging?

Currently, America’s roads are paid for through a variety of means: fuel taxes, tire taxes (for trucks), vehicle registration fees, tolls, general fund revenues (including sales taxes), and others. In the last decade, a number of governments, including some foreign and U.S. state governments, have begun experimenting with collecting revenue directly from drivers on the basis of their travel. There are many terms for this, including mileage-based user fees (MBUF), distance-based user fees (DBUF), vehicle miles traveled tax (VMTT), and road user charges (RUC). The idea is that payments should be based on actual travel. A number of states, including California, Colorado, Delaware, Hawaii, Minnesota, Oregon, Pennsylvania, and Washington, have launched pilot RUC programs, most with partial federal funding, while a number of other states are considering such programs. The U.S. Department of Transportation has funded a number of rounds of state RUC pilot programs, including most recently in April of 2018. A major factor motivating interest in an RUC system is the concern that with the expected rise of more fuel-efficient vehicles, especially EVs, governments will be unable to obtain adequate revenues to support transportation infrastructure.

Download full version (PDF): A Policymaker’s Guide to Road User Charges

About the Information Technology & Innovation Foundation
itif.org
Founded in 2006, ITIF is an independent 501(c)(3) nonprofit, nonpartisan research and educational institute—a think tank—whose mission is to formulate, evaluate, and promote policy solutions that accelerate innovation and boost productivity to spur growth, opportunity, and progress. ITIF’s goal is to provide policymakers around the world with high-quality information, analysis, and recommendations they can trust. To that end, ITIF adheres to a high standard of research integrity with an internal code of ethics grounded in analytical rigor, policy pragmatism, and independence from external direction or bias.

Tags: Information Technology & Innovation Foundation, ITIF, roader user charge, Tools, User Fees

This entry was posted on Monday, April 22nd, 2019 at 11:10 am and is filed under Funding, Highway, Infra Views, Roads, Tax . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.