California’s Plan for a Mileage Tax: An Examination of Costs and Consequences
California is moving forward with a controversial initiative that would replace its gas tax with a per-mile road usage fee. This plan, backed by state officials including Governor Gavin Newsom, is raising alarms because it could burden families with costs ranging from $1,200 to over $4,000 each year. As more drivers shift to electric vehicles (EVs), officials believe new revenue sources are necessary to maintain the state’s transportation infrastructure.
The proposed fee would charge drivers a fixed rate—somewhere between two and four cents—for each mile driven. For instance, at a rate of 3 cents per mile, a commuter traveling 75 miles daily would face significant added charges. Weekly travel costs would quickly accumulate to over $11, translating to nearly $600 annually for just one driver. Combine that with two working adults or the daily errands of a family, and the financial impact could reach or exceed $4,000 annually for those with high mileage.
Public sentiment has been decidedly negative. One viral tweet captured the frustration: “WOW. Millions of Californians are FURIOUS after Democrat officials plan a tax on MILES DRIVEN — ranging from $1,200 to over $4,000 PER YEAR on families.” This reaction speaks to a broader sense of discontent regarding state policy decisions that affect everyday life.
Proponents of the mileage tax argue it reflects necessary modernization. They point out that California’s reliance on gas taxes has become untenable as EV adoption accelerates. Currently, gas taxes fund about 80% of road maintenance, but with more EVs on the road—vehicles that contribute little to no gas tax—there’s a pressing need to find alternative funding sources. Heavier EVs are not without their costs; the wear they inflict on infrastructure must be accounted for.
The state’s recent history supports the urgency for change. Following a gas tax increase in 2017, there was a temporary boost in revenue, but projections indicate a decline in the long run. California is pushing toward 100% zero-emission vehicle sales by 2035, leading officials to explore stable funding options as traditional sources diminish.
“Due to their heavier weight, EVs contribute to increased wear on roads and bridges,” highlights one analysis, pointing to an underlying economic rationale for the proposed fee.
Since 2021, California has been testing the waters through pilot programs aimed at assessing public willingness to participate in mileage taxation. Volunteers have tested various methods for tracking distance, including odometer readings via photos and even GPS devices. Despite efforts to address concerns, many participants have expressed dissatisfaction. Some have underreported mileage to reduce charges, while others flagged privacy risks associated with mandatory tracking methods.
UCLA Professor Michael Manville noted a crucial aspect of the policy dynamics at play, stating: “Because you actually want people to buy electric cars, and right now, one of the biggest inducements is…you don’t have to pay the gas tax.” Transitioning from a benefit to a new fee for EV owners presents risks to the state’s objectives in promoting electric vehicles.
For residents of rural areas, where long commutes are the norm, this new fee could prove particularly burdensome. Californians already grapple with a high cost of living and soaring gas prices, which makes an additional tax on mileage a concern for many. State Senate Republican Leader Scott Wilk aptly described the plan as “a huge blow to middle-class families,” emphasizing the necessity of commuting in his district. Wilk’s statement underscores the broader implications of the proposed tax on daily life and financial stability.
The implications extend beyond individual households. Over the years, while state budgets have increased, funding for transportation has lagged behind. The Institute on Taxation and Economic Policy reports a drop in gasoline consumption per vehicle by more than 25% since 1993. As road maintenance costs have risen, California’s search for a reliable funding stream has intensified.
California has a reference point in Oregon’s OReGO program, which offers a mileage fee in exchange for fuel tax credits. However, implementation in Oregon has not been without its difficulties. Some participants have echoed concerns over privacy and fairness—issues that will likely reemerge in California’s efforts.
The conclusion of California’s latest pilot program is anticipated to yield more insights. It tested a model where vehicles are charged more based on their weight, but skepticism remains. Critics argue that while the financial projections may seem reasonable, the human costs inherent in the per-mile tax could overshadow the benefits. In fact, for a typical two-car household averaging 20,000 miles annually, they could end up paying between $1,500 and $2,400, creating unaffordable scenarios for lower-income families or small business owners who rely on driving for work.
Senator Wilk’s direct statements highlight the fundamental unfairness of the planned tax, which appears to target those already struggling financially. A vital concern is the impact on Californians who feel increasingly burdened by rising costs across the board, from housing to energy, making the per-mile tax feel like yet another challenge to face.
The commitment to a road-use charge model seems unwavering among state officials, who believe that failing to address road maintenance will lead to worse conditions and higher repair costs down the line. The challenge will be designing a system that doesn’t unduly penalize those already bearing considerable costs.
In the coming months, as California evaluates the pilot program and works on legislation, it seems clear that drivers will likely find themselves paying not only for the privilege of owning a vehicle but also for every mile they travel.
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