I. Introduction and Background
The gasoline tax has provided revenue for the Federal and State Highway Trust Fund (HTF) for decades; however, the tax rates have remained stagnate leading to the funds depletion. The HTF is responsible for funding highway and mass transit projects and also maintenance of those projects at the Federal and State level. In 2005 around 80 percent of funding for all projects came from the gasoline tax (Kim, Porter, Whitty, Svadlenak Lareson, Capps, Imholt & Person 2008, pg. 37). Thus, it is vital for the HTF to be a revenue collecting system that can replace the gasoline tax.
Oregon has recently begun testing an alternative revenue collection program to fund their HTF. Currently, State gasoline tax is set at 24 cents per-gallon and that is on top of the Federal gasoline tax of 18.4 cents, which only, 18.3 cents is used for roads, the total tax equals to 42.4 cents per-gallon (McMullen, Zhang, & Nakahara, 2010, pg. 360) (Austin & Dinan, 2012 pg.2). The gasoline tax has not been raised in years and is unable to keep up with fuel-efficient technologies. Consequently, the Federal government has had to allocate funds to States HTF for projects along with States having to borrow money form their other accounts. Therefore Oregon proposed the 2007 Road User Fee Pilot Program to test if a vehicle mileage traveled (VMT) tax is a feasible solution to the gasoline tax.
Oregon’s propose program is in response to new fuel-efficient vehicles and corporate average fuel economy (CAFE) standards that have forced the automotive industry to rise miles-per-gallon in new vehicles to help combat climate change. It is estimated that CAFE standards have lower the gasoline tax revenue around twenty percent (Austin & Dinan, 2012, pg. 1). The standards are set to reduce gallons of gasoline consumed by twenty-five percent, from 160 billion gallons to 119 billion gallons of gasoline (Austin & Dinan, 2012, pg. 4). New vehicles are able to go further on a gallon of gasoline, while collecting the same per-gallon tax fee. Therefore, Oregon purposed the VMT fee, which set the fee at 1.2 cents per-mile and designed to be revenue neutral (McMullen, Zhang, & Nakahara, 2010, pg. 360). By being a revenue neutral program, the government intendeds that the revenue remain unchanged; however, it allows the burden of the tax to lower for one group and rise for the other. This paper will examine the equity, efficiency, implementation, and feasibility of Oregon’s 2007 Road User Fee Pilot Program.
II. Rational for a Role for Government
Officials within Oregon have realized that the State is not receiving as much revenue from the State and Federal gasoline tax; therefore, they decided to enact and test a pilot program that collected revenue using a per-mileage tax. This pilot program would suspend the gasoline tax and eventually eliminate the tax if the program was adopted. Oregon’s official’s decided they had a responsibility to enact a...