A Vehicle Miles Traveled tax could be the way out

By Herbert Rothschild

After the Oregon Legislature failed to pass a transportation funding bill in the 2025 general session and before it passed one in a session Gov. Tina Kotek called especially for that purpose, I wrote a column titled “It’s time to abandon the gas tax.” In it, I discussed an alternative, the Vehicle Miles Traveled tax.

I’m returning to the subject because transportation funding once again will be a big issue, this time in the short session that convenes Feb. 2. That’s because a Republican-led grassroots campaign to repeal the 2025 law via a referendum on the November ballot quickly gathered far more valid signatures than the law requires — about 250,000 compared with the requisite 78,000.

Given that show of public dissatisfaction, the governor and Democrats in the House and Senate now must decide how to anticipate repeal.

Several considerations are in play. If they don’t change the law and the ballot measure passes, the state will face once again a gap between Oregon Department of Transportation-dedicated revenue and expenses. Further, the ballot measure may engage an unusually large number of conservative voters and thus hurt Democratic candidates.

If the Legislature repeals the unpopular law and allows things to revert to the status quo ante, the governor could cut the ODOT budget and let the road system deteriorate. Which party would take most of the blame for that is uncertain, and per se it would be bad for all of us. Or Kotek could use money from the state’s “rainy day fund” to make up the shortfall. That might confirm the Republicans’ tiresome mantra that government programs never need new funding, just the elimination of mismanagement, waste and fraud. That choice also per se would be bad for all of us, since it’s likely that states soon will have to find money to cover lost federal funding.

In light of these unhappy options, it behooves Democrats to come up with a transportation funding bill that doesn’t include the most despised and regressive provisions of what they passed last year — namely, a $42 increase in the registration fee and a $139 increase in the title fee.

Therefore, I again recommend that the governor and state legislators consider the VMT tax. Sometimes called a road use fee, the VMT tax is assessed on each mile driven on roads within the taxing jurisdiction.

As I explained before, the VMT tax is not a new idea. Four states have opt-in programs for passenger vehicles, and five states tax heavy commercial vehicles per mile. Oregon does both. Sixteen more states have launched pilot programs to explore how best to implement a VMT tax.  

A new incentive for states to consider alternatives to the fuel tax is the increasing use of all-electric vehicles, which have been getting a free ride. The 2025 Oregon law imposes a VMT tax or an annual opt-out fee of $340 on EVs starting in 2027 and the same tax or opt-out fee on hybrid vehicles starting in 2028. Hawaii will levy its tax on all EVs in 2028 and on all passenger vehicles in 2033.

Opposition to the VMT tax so far hasn’t focused on its cost if it’s proposed as a substitute for, not an add-on to, taxes at the pump. OReGO, Oregon’s voluntary VMT pilot program established in 2007, reimburses participants for any fuel taxes they pay. Rather, the two main complaints are that the VMT tax penalizes rural drivers, who routinely have to travel longer distances than urban drivers, and that the systems for tracking VMTs invade privacy.

The first objection isn’t hard to overcome. The tax that drivers pay could be capped annually. That is essentially what states have done when they give EV owners a choice between the per-mile-driven tax and a fixed fee. Determining a fair maximum payment isn’t a daunting challenge.

Tracking VMTs is more complex. OReGO offers its participants several choices, all designed to allow drivers to subtract the miles they drive outside the state (which are exempt from Oregon taxation) from their total annual mileage. These are the choices:

Odometer capture. The driver takes a photo of the odometer reading and submits it periodically to report miles. Other jurisdictions read odometers when registrations are renewed and/or emissions systems are checked.

Telematics. Some cars have built-in telematics that can distinguish in-state from out-of-state miles.  

Onboard diagnostic device. It plugs into the diagnostic port and adds another reporting capability to the OBD tool that every vehicle has to monitor its emissions. Some such devices may use GPS to distinguish in-state from out-of-state miles. If the device doesn’t, the driver can adjust for out-of-state travel manually.

Another method, not currently an OReGO option, uses a smartphone app.

The odometer capture method for determining miles driven in the state entails no privacy issues. It is, however, subject to cheating. Even assuming that the odometer isn’t tampered with, the out-of-state mileage is self-reported and can be fudged. The other methods do raise privacy concerns. Realistically, though, if a governmental agency wishes to track our movements, those who travel with cell phones are easy targets right now.

Further, on the OReGO website there is a pledge that the participants’ locations aren’t being tracked. “Even if you select a GPS-enabled option for reporting your miles, your vehicle’s location information is never disclosed to ODOT. GPS data is only used by your OReGO account manager to determine the number of miles driven out of state in order to exclude them from your bill.”

And by law, OReGO data must be destroyed after 30 days unless they are disputed by the driver or under audit.

Unfortunately, there are too few cars enrolled in OReGO — between 1,600 and 2,100 — to reliably assess its participants’ experience. Still, it may be helpful if legislators mandated a survey.

Given the unhappy choices Oregon’s governor and Democratic legislators face, they would do well to return the title and registration fees to their previous levels and, starting this year, gradually phase out the fuel tax and phase in a VMT tax high enough to generate the needed revenue.

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Updating an earlier column: Last July I noted that, as Israel’s cruelty turned U.S. public opinion against it, Zionist organizations were intensifying their efforts to silence criticism. The most extreme was Betar, incorporated as a nonprofit in the state of New York, whose activities I described. On Jan. 13, New York Attorney General Leticia James announced that the organization will close, saying: “My office’s investigation uncovered an alarming and illegal pattern of bias-motivated harassment and violence designed to terrorize communities and shut down lawful protest.”

Herbert Rothschild’s columns appear Fridays. Opinions expressed in them represent the author’s views. Email Rothschild at [email protected]. Email letters to the editor and Viewpoint submissions to [email protected].