Oregon Prepares Pay-By-The-Mile Tax

May 29, 2015

When you buy gas for your car, you're paying a flat, per-gallon tax. But Oregon is starting a new program July 1 that would change things.

Rather than paying a traditional gas tax, you would pay a flat tax per mile you drive. It's meant to offset money being lost in gas taxes due to more fuel efficient cars. The voluntary program, called OreGo, opens to the public in July.

How it works

When you sign up for OreGo, you get a little electronic gadget in the mail. The device goes is into the same port under your steering wheel that your mechanic plugs in the diagnostic computer.

This device won't tell you what's wrong with your car. But it does track your mileage. And each one of those miles will cost you one-point-five cents. The OreGo device also measures how much gas you put in your car.

So when you pull into a gas station, you just fills up your tank like usual. The pump doesn't know that you are part of the OreGo program, but the car does. So at the end of the month all the tax you pay at the pump will be deducted from the per mile charge. That way, you aren't dinged twice.

OreGo volunteers also won't be charged for miles they drive outside of Oregon. The tracking device includes a GPS units that will know when you've left the state. Due to privacy concerns expressed by civil liberties groups, ODOT will also offer a non-GPS tracking version of the program. Those drivers will manually keep track of their out-of-state miles in order to receive a credit for them.

‘We use the roads like everybody else’

When it comes to paying more for the upkeep of Oregon roads, Tom Fuller has seen the light.

"Prius drivers ought to be contributing to road maintenance because we use the roads like everybody else,” he said. “So it makes sense."

Of course, Fuller has to be a fan of Oregon's pay-by-the-mile tax. He's the spokesman for the Oregon Department of Transportation. And he's one of a select few drivers who took part in the trial run of OreGo this spring.

On average, Fuller pays more in fuel taxes than he would if he stuck with the traditional method. On the other hand, a driver of a gas guzzler would pay less with a mileage tax.

That twist has some environmental groups skeptical.

A disincentive for fuel efficiency?

"People should be incentivized to buy more fuel efficient cars such as electric vehicles, hybrid electric vehicles and so on." said the Oregon Environmental Council’s Chris Hagerbaumer.

She pointed out that Oregon used to hand out tax credits to people who bought hybrids. Now, it's moving toward a system that essentially penalizes people with fuel efficient vehicles. Hagerbaumer said she understands the need to come up with new ways to pay for highways, but she said inefficient vehicles cost society more than simply wear and tear on the roads.

"They're contributing to climate change and contributing to air quality problems,” Hagerbaumer said.

Hagerbaumer said a flat per-mile rate isn't the best way to go. She suggested less fuel-efficient vehicles should pay more as a way to offset their emissions.

But state transportation officials said a gas tax of any kind is simply a way to fund road construction, not a way to encourage fuel efficiency. And Fuller said hybrid owners like him ultimately pay less to drive their vehicles under any tax system.

"It cut my gas bill in half,” Fuller said. “But that also means that I pay half the amount in fuel tax that I used to."

Even when Oregon's pay-by-the mile tax goes live, it will still be somewhat of an experiment. Only 5,000 drivers can sign up. Oregon lawmakers could expand the program if it proves successful.