Report examines costs of fuel tax vs. road user charge

SAN JOSE, Calif. (Nov. 11, 2015) — With debate continuing about the funding shortfall for U.S. highways, government agencies are looking at various means to raise revenue.

Two methods to address the shortfall are a vehicle fuel tax and a road user charge. But which one will cost more per household? Researchers at the Mineta Transportation Institute (MTI) have conducted a comparative analysis of the issues. Their peer-reviewed report, “Household Income and Vehicle Fuel Economy in California,” found that the differences are minimal, according to MTI.

The principal investigator was Christopher E. Ferrell, PhD, working with David B. Reinke. The free report can be downloaded by clicking here.

“The current per-gallon fuel tax is no longer keeping up with highway funding needs,” Mr. Ferrell said, “because vehicles can travel much farther on a single gallon of fuel. But it has been difficult to convince voters to increase that tax.

“If revenue were based on a fee per mile traveled, it could be more realistic. But would it be a disadvantage to particular income groups or to those who live in rural areas? That was the basis of our study.”

The MTI report — which includes eight tables illustrating the findings — addresses four primary results from the research:

• Daily household fuel consumption and vehicle miles traveled (VMT) both appear to increase with increasing household income.
• Urban and rural households show roughly the same amount of fuel consumption and VMT.
• Although the researchers found some slight differences in estimated costs over different income groups and rural vs. urban households, they found no statistically significant difference among income groups between a vehicle fuel tax and a road user charge.
• These results are based on sample data and are therefore subject to sampling errors in the data. Fuel efficiency for vehicles of the same make, model, model year and engine type will differ because of several differences, including maintenance, driving cycles, vehicle loads and fuel type — regular vs. premium.

“It is important to note that other aspects to these alternatives should be examined to provide complete information for decision makers,” Mr. Ferrell said. “For example, a fuel tax is an across-the-board tax that applies equally to all vehicles, regardless of size or weight.

“On the other hand, a road user charge could be based on vehicle class, which would more fairly assess different vehicle classes for the actual wear and tear they impose on the road system.”

The analysis was based on two data sources: the California Household Travel Survey from 2010-2011, which covered a statewide sample of households; and the Environmental Protection Agency (EPA) database on vehicle fuel efficiency.

Mr. Ferrell began his planning career in 1995 with the Metropolitan Transportation Commission (MTC). Since 2000 he has been a transportation consultant, and in 2010 he co-founded CFA Consultants, a transportation planning and research firm.

Mr. Reinke began his planning career in 1973 with the London Borough of Camden, where he worked on a livable neighborhoods plan, priority bus lanes and development of a traffic-monitoring program. Since then he has worked for Crain & Associates, BART, Dowling Associates, and Kittelson & Associates.

MTI conducts research, education and information transfer programs regarding surface transportation policy and management issues, especially related to transit. Congress established MTI in 1991 as part of the Intermodal Surface Transportation Efficiency Act (ISTEA). The institute, which won national re-designation competitions in 2002, 2006 and 2012, is funded through the U.S. Department of Transportation, the U.S. Department of Homeland Security, the California Department of Transportation and public and private grants. MTI's international board of trustees represent all major surface transportation modes.