Vehicle Mileage Fee on Income and Spatial Equity

Abstract

Because of concern about the declining purchasing power of gas tax revenue due to inflation, public opposition to tax increases, and the improved fuel efficiency of new vehicles, the 2001 Oregon legislature created the Road User Fee Task Force (RUFTF) to make recommendations for a potential replacement for the gasoline tax. This paper estimates the distributional impact of the statewide vehicle miles traveled (VMT) fee policy proposed by the RUFTF on individuals with different incomes and residential locations. The methodology employs both vehicle ownership and type choice models and regression-based vehicle use models. This allows an examination of both short- and long-run responses from the affected households. The measures of the distributional impact of the proposed VMT fee include changes in consumers’ surplus, fee-collection agency revenue totals, and overall welfare changes by income and location groups. The results show that the distributional effects of a $0.012/mi flat VMT fee are not significant in either the short or long run and suggest that distributional concerns should not be a hindering factor in the future implementation of the proposed VMT fees.

Equity Evaluation of Fees for Vehicle Miles Traveled in Texas

“…Zhang et al used 2001 NHTS data to consider both the short-term and long-term equity implications of a flat VMT fee of 1.2 cents per mile in terms of equity by both household income level and residential locations (15). The authors state: "The results show that the distributional effects of the VMT fees are small and thus should not be a hindering factor in the future implementation of the proposed VMT fees" (15).…”

“…Zhang et al used 2001 NHTS data to consider both the short-term and long-term equity implications of a flat VMT fee of 1.2 cents per mile in terms of equity by both household income level and residential locations (15). The authors state: "The results show that the distributional effects of the VMT fees are small and thus should not be a hindering factor in the future implementation of the proposed VMT fees" (15). However, they also mention that a flat VMT fee of this nature does not produce any type of incentive to drive more fuel-efficient vehicles and that future research should take fuel efficiency into account through creating a "more sophisticated VMT fee structure" (15).…”

The Impact of Economic Policy Uncertainty on the Vehicle Miles Traveled (Vmt) in the U.S.

“…Vehicles for passenger, age of the principal driver, number of drivers at home, engine characteristics, amount of travel outside of capital cities, and interstate and the level of business-related travel significantly affect the motor vehicle usage. Zhang et al (2009) model annual household Vehicle Miles Traveled (henceforth VMT) in Oregon and six states similar to Oregon. Fuel cost and living in an urban area decrease the VMT while the number of vehicles, income, and being a male lead to an increase in the VMT.…”

Equity performance evaluation of two different pricing options: fuel tax per gallon and VMT fee

“…Past implementations of this alternativemainly in Europeinclude a mileage-based fee which varies according to mileage, road and vehicle characteristics, and traffic conditions. Such a scheme has been implemented in the past but not extensively and (Whitty, Svadlenak, & Capps, 2006), and Zhang et al (Zhang, McMullen, Valluri, & Nakahara, 2009). Other states that have expressed their interest in identifying alternative revenue sources include Alabama (Sisiopiku, Waid, Rizk, McLeod, & Robins, 2006), (Sisiopiku & Waid, 2007), Virginia (Boos & Moruza, 2008), Michigan (Southeast Michigan Council of Governments, 2006) and Iowa (Forkenbrock & Kuhl, 2002).…”

“…have some inherent differences that should be accounted for when merging them into one file. (Poterba, 1990), (Zhang, McMullen, Valluri, & Nakahara, 2009), (Moghadam, 2011), (McMullen, Zhang, & Nakahara, 2010), (Litman, 1999), (Lindsey, Schofer, Durango-Cohen, & Gray, 2011), (Kayser, 2000), (Fullerton & West, 2002), (Busse, Knittel, & Zettelmeyer, 2009), (Bento, Goulder, Jacobsen, & von Haefen, 2009), (West, 2004), (Larsen, Burris, Pearson, & Ellis, 2012). Also, the author has excluded 7,205 observations of HHs with zero vehicles from the Household File, as these HHs did not generate observations on fuel efficiency and VMT that are of interest in this study (McMullen, Zhang, & Nakahara, 2010).…”