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California Looks into Per-Mile Tax to Replace Fuel Levy

December 11, 2017, by Steven Martinez

The state of California uses fuel taxes to pay for infrastructure improvement and repair – but could change that. Photo via CalTrans
The state of California uses fuel taxes to pay for infrastructure improvement and repair – but could change that. Photo via CalTrans

The state of California commissioned a report by CalTrans to look into the viability of a mileage-based tax on all vehicles to eventually replace the tax on fossil fuels.

Earlier this year, the state passed its first fuel tax increase since 1994 to pay for the state's infrastructure costs. The measure added 12 cents in tax per gallon to gasoline and 20 cents on a gallon of diesel fuel.

Despite the increased revenue expected from updating the fuel tax, the state is already looking at a tax that is based on mileage instead of gallons, in order to counteract the drop in fuel taxes from increasingly efficient conventional and alternative-powered vehicles. While the new increase should be more than capable of funding the state’s infrastructure costs for now, a recently released report from CalTrans shows that a gas tax will not be able to keep up in the future.

“When initially instituted, the gas tax methodology was an equitable revenue system, generally due to vehicles having comparable fuel consumption rates,” the report states. “However, as more fuel-efficient vehicles are entering the California fleet, the gas tax limitations have become more apparent.”

The study looked at data over a nine-month period from more than 5,000 vehicles ranging from passenger through heavy-duty commercial vehicles. Using a variety of manual and automated methods for tracking miles, the participants simulated the tax at a 1.8-cent-per-mile rate. The rate was based on a five-year average of the gas tax and represented a revenue-neutral option.

Overall, the report determined that a per-mile tax was a viable alternative to a gas tax or other methods. However, it acknowledged that there were issues that needed to be worked out, such as reliable methods for tracking and exchanging data and then using that information for billing. One of the points in favor of the current per-gallon fuel tax is that it can be assessed and charged at the pump, requiring no information from the vehicle.

Some methods being studied would require installing a device that communicates with a vehicle at pumps and battery chargers to confirm mileage numbers and assess a charge. For commercial vehilces, on-board devices like electronic logging devices that plug into the diagnostic port could be used for the purpose.

Joe Rajkovacz, the director of governmental affairs and communications for the Western States Trucking Association, told HDT that he participated in the pilot program so he would be able to comment intelligently to members about it. He characterized participation in the pilot as simple enough, and said he used an ECM style plug-in to allow vehicle tracking.

He was still skeptical about whether the mileage tax would have resulted in more revenue to the state than a traditional collection method. However, Rajkovacz’s take was that a vehicle mileage tax was likely the only way to fairly tax fuel-efficient or alternative-fueled vehicles. 

This was a sentiment shared by 73% of the participants in the pilot program, according to the report.

“Since this state is pushing for zero/near-zero emissions mandates (elimination of fossil fuels), the reality is the fuel tax isn’t going to work to collect highway use fees from those operating alt[ernative fuels],” Rajkovacz told HDT. “Many who operate these kinds of vehicles think they are something special, and ironically kick back at the notion of paying their fair share to use highways, thinking the fact they drive zero-emissions vehicles is so noble they shouldn’t have to pay at the same level all other motorist do.”


  1. 1. MIchael Galorath [ December 12, 2017 @ 05:30AM ]

    Thoughts How would you tax me if I like drove from LA to NYC. Each state I drove through taxed me at the pump. When I returned and needed fuel I would be required to pay a 6000 miles road use tax, Better yet if I live close to the state line of Nevada and travel to buy my fuel and Lotto tickets. Where I pay the tax on fuel at the pump. I do this for a year. Then one day I have to buy fuel on a trip further into the state. I think it bad enough where when I buy fuel for my lawn mower I pay road use tax for the fuel. How would a rental car be charged? I could go on CMV in large fleets that fuel on property pay a mileage tax period. How do or would they collect mileage traveled in my collector car like a 32 ford. At .18 per mile seems very steep. Why would they start at an out ragas number, start lower and see how much it brings in first. They want all the money now to fix issues politicians have avoided for decades. Now if we had excellent public transportation this is another story

  2. 2. Brian [ December 12, 2017 @ 07:46AM ]

    MIchael Galorath, its worse than all that... Think about it, its COMMYfornia. So if they get this rule passed, I can almost guarantee that they will "forget" to take off the fuel tax, and double dip. And then it will take 7 years to get one of the rules removed, but all of a sudden, that broke state of COMMYfornia will go from being a broke state, to have a surplus.

  3. 3. Richard Davis [ December 12, 2017 @ 09:38AM ]

    Doesn't New Mexico and Ky. do the same thing now. You have to pay a mileage fee for the miles you drive in that state. There is also a fuel tax on the fuel you buy and you have to pay on your IFTA. Ca. is not going to do away with the state fuel tax when they add the mileage tax. My guess now. Another reason the pay for trucks to go up. Everyone is trying to make money off them. Like Arkansas and Kansas, you have to pay an ad valorem tax on your truck in those states. For just passing through.

  4. 4. CW.Horner [ December 13, 2017 @ 09:31PM ]

    Where has the money gone that was supposed to pay for the roads in the first place?

  5. 5. Richard Davis [ December 16, 2017 @ 12:30PM ]

    The federal government could add 1.00 tax to a gallon of gas and diesel. Each state does the same thing. 2.00 a gallon tax and in a year or two that won't be enough money. It will never be enough, no matter how much it is.


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