Improving gas mileage and growing sales of electric vehicles have prompted a national search for alternatives to gas taxes to pay for roads and bridges.
Now a 17-state coalition that includes North Carolina is seeking volunteers to help test one option: The “mileage-based user fee” or MBUF.
With an MBUF, the government would collect money for highways based on how many miles a car or truck drives, rather than how much fuel it burns. The challenge is determining how to track a vehicle’s mileage and collect the proper fee or tax from millions of vehicle owners.
The Eastern Transportation Coalition has been studying the idea for several years through surveys and pilot programs involving commercial trucks and private vehicles. It’s looking for volunteers in North Carolina to help with its latest effort, examining the fairness of an MBUF compared to gas taxes, said Lisa Miller, the coalition’s spokeswoman.
“We’re looking at geographic differences of urban versus rural and making sure that low-income households or fixed-income households are not being harmed by MBUF — that it is going to be equitable for everyone,” Miller said.
Through its earlier research, the coalition concluded that a single per-mile fee was both fairer and easier for people to understand. Setting variable rates based on a car’s mileage resulted in significant differences in payments for even small differences in mpg.
A flat per-mile rate, though, would mean that owners of cars that get good gas mileage could pay more under an MBUF than they do in gas taxes, all things being equal. The coalition’s website includes a calculator where drivers can see the difference.
Another concern about mileage-based fees is privacy. Options for tracking mileage include a vehicle’s on-board GPS system or added devices that may or may not use GPS (the coalition’s pilot study also allows participants to simply report their odometer readings).
In an earlier study, more than half of people who volunteered to try MBUF said they were concerned about privacy at the outset. By the end of their experience, that number had dropped to 7%.
“Once they explore it, once they participate a little bit, they feel much more comfortable about the reporting options and being involved,” Miller said.
Volunteers in the coalition’s latest study would drive as they normally do in the coming months, while the number of miles is recorded and a theoretical MBUF calculated. For more information about the study and to volunteer, go to tetcoalitionmbuf.org/.
The coalition is looking for about 450 volunteers in North Carolina, Miller said. About 100 of those will likely be employees of NCDOT, which supports the study.
“From work going on in other states around the country we know there are notable barriers to replacing the fuel tax with an MBUF, and that is why this research is so important,” NCDOT Secretary Eric Boyette said in a written statement. “The public’s involvement in this pilot program will help to identify what will work, and what won’t work for North Carolina.”
NC seeks others gas tax alternatives
Combined, state and federal taxes are the largest source of revenue for the N.C. Department of Transportation, which has an annual budget of about $5 billion a year.
But the gas tax has become less dependable, as improved mileage means people pay less in taxes to drive the same distance. The owners of electric vehicles, a small but growing share of the market, don’t pay any gas taxes at all.
North Carolina charges electric vehicle owners a $140.25 annual fee in lieu of gas tax payments. Owners also pay sales taxes on the electricity they use, though that money goes into the General Fund rather than to NCDOT.
Still, the N.C. First Commission, created by NCDOT to explore alternatives to the gas tax, concluded that electric vehicle owners pay $50 less a year “in transportation-related fees and taxes than the comparable average driver.” The EV fees also face criticism for charging all vehicle owners the same regardless of how much they use the roads.
The state budget approved by lawmakers last week takes an initial step to augment gas taxes by proposing to divert some general sales tax revenue to transportation. The budget calls for redirecting 2% of state sales tax revenue to NCDOT in the fiscal year that’s about to begin, increasing to 4% the following year and 6% each year after that.
Gov. Roy Cooper has not said yet whether he will sign the budget bill into law.
This story was originally published July 7, 2022 1:12 PM.
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