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Transportation Funding & Financing

VMT Fees

Mileage-based, direct user fees that apply on all roads and all driving are known as vehicle miles traveled (VMT) fees. These charges can either be a flat fee (e.g., a fixed number of cents per mile, regardless of where or when the travel occurred), a variable fee based on user choice considerations such as time of travel, congestion levels on a facility, type of road traveled on, type and weight of the vehicle, and vehicle emission levels, or a combination of these factors.

Oregon instituted a pilot program that charged a fee by measuring odometer changes through additional onboard equipment and that collected fees through gas stations (in lieu of charging the fuel tax). Germany has a system of charging trucks tolls for miles traveled, exhaust emissions, and number of axles. The charges are calculated using on-board global positioning satellite system equipment and wireless communication devices. A related method, used in Israel, the Netherlands, and the United Kingdom, is pay-as-you-drive insurance. The fee is collected monthly based on odometer readings transmitted by a wireless device.

As an interim step to implementing a true VMT tax, a Federal per-mile fee-an Annual Highway Miles Traveled Fee-could be implemented based on self-reporting of annual miles traveled and collected by states along with annual vehicle registration fees. A one-cent per-mile fee could raise $32.4 billion in 2010.