A new driving tax is about to hit drivers as another state in the United States prepares to implement it. The controversial Pay-Per-Mile fee was first implemented in Hawaii in July, and now Oregon has joined in implementing it.
According to the Pay-per-mile rule, EV drivers are required to pay for the miles they travel, as they are exempt from paying the fuel tax. Lawmakers in Oregon debated how to close over $300 million deficit in the transportation budget.
The budget deficit threatened maintenance, road repairs, and snowplowing. This pushed the government to come up with a solution.
Why did Oregon Introduce the New Tax?
Without a new revenue stream, Oregon’s transportation department cannot afford to repair or maintain roads. Nearly 500 workers faced possible layoffs, while about a dozen road maintenance stations were at risk of closure. Funding dropped due to inflation and the decline of gas tax revenue, which had been the primary source of road funding.
Governor Tina Kotek proposed raising the gas tax by six cents to 46 cents per gallon and introducing a mandatory road usage fee for EVs and hybrids. Beginning in 2027, EV owners would pay about 2.3 cents per mile or opt for an annual flat fee of $340.
Under the proposal, drivers who enroll in the program will not pay the supplemental EV registration charges. The usage charge will expand to include hybrids in 2025, while certain EVs are expected to be included in 2027.
Hawaii’s Implementation of the First Mandatory Road Usage Tax.
In 2023, Hawaii became the first state to implement a tax on road usage. The tax was designed to ensure EV drivers paid for road upkeep, as they were not paying the gas tax. Hawaii requires EV drivers to pay $8 for each 1,000 miles driven, which is capped at $50, or pay an annual flat fee of $50.
All EV drivers in the state will be required to have enrolled in the program by 2028, while light-duty vehicles are required to have enrolled by 2033.
The initiative is undergoing pilot programs in other states such as Utah, Virginia, and Vermont. In Arizona, the program’s fate will be decided by voters, as they will be voting to decide if it should be banned. This indicates how the whole nation is divided over road usage taxes.
The Issue of Privacy and Fairness.
In Oregon, drivers are worried about how the state will track car mileage and fear they could be under government surveillance. Under the proposal, drivers will be required to log miles using a smartphone app, in-built vehicle telematics, or any other reporting tool.
While officials say vehicle mileage data will be deleted 30 days after payment, there are concerns regarding surveillance.
Advocates Push Fairness, Critics Raise Concerns
Advocates are warning against penalizing EV owners. Brett Morgan, transportation policy director at Climate Solutions, said: “We are definitely supportive of a road usage charge that has EVs paying their fair share, but they should not be paying extra or a penalty.
Critics argue that if EV owners end up paying more than drivers of gas-powered cars, the policy could undermine efforts to cut emissions and discourage people from buying electric cars.
Conclusion.
If the proposal is approved, Oregon will become the second state to enforce a mandatory pay-per-mile fee after Hawaii, the pioneer. The state has 84,000 EVs, which are registered and represent about 2% of the whole state’s total vehicles.
With fuel taxes being insufficient to fund infrastructure, states across the country are searching for alternatives. Oregon’s decision could become a model for other states. Either way, the fight over how Americans will be paying for their roads is only just beginning.