Mileage-Based User Fees Are a Sustainable Way to Fund Roads, Replace Gas Taxes

While fuel taxes have largely worked well for decades as a means for funding roads and highways, they now suffer from a number of problems. The increasing fuel economy of today’s vehicles makes fuel taxes less effective over time, as does the increased use of electric vehicles and other alternative fuel vehicles that avoid paying fuel taxes altogether.Meanwhile, cities and states are increasingly diverting fuel tax revenues away from road and highway maintenance and operations to light rail and other transit. In addition, the cost of repairing and maintaining roads continues to rise.

U.S. Secretary of Transportation Pete Buttigieg recently highlighted the potential of mileage-based user fees (MBUFs) to provide a replacement for fuel taxes. But Buttigieg received massive blowback from both sides of the political aisle.

Yet, by treating roadways like a utility, similar to power or water, we would be strengthening the users-pay principle. As Buttigieg noted, just as power or water bills are mostly based on the rate of use of those services, paying for roads should follow utility charging principles: “If we believe in that so-called user-pays principle, the idea that part of how we pay for roads is you pay based on how much you drive.”