Mileage-Based User Fees: Can a Road Usage Charge Replace the Gas Tax?

Trump waives dyed diesel penalties and the federal diesel excise tax through Dec. 31, while a Reason Foundation analyst explains how mileage-based user fees in four states could replace the gas tax as EVs and fuel efficiency erode road funding. Dyed diesel order: At a Monday campaign rally in Nebraska, President Trump directed the Agriculture Secretary to ensure farmers have access to dyed diesel in high-demand areas, and told the Transportation Secretary to work with states, labor organizations, and fuel distributors to increase access. Dyed diesel is tax-exempt and normally barred from public roads, with a minimum $1,000 fine for highway use. The Center Square's Alton Wallace reports the order waives those penalties through Dec. 31, and the IRS will also waive the 24.4-cent-per-gallon federal excise tax on on-highway diesel through the end of the year. Trump said the move could save the average trucker around $100 per fill-up. Whether it makes a measurable difference remains to be seen. The road funding problem: Reason Foundation transportation policy analyst Jay Derr says fuel taxes are losing ground to electric vehicle adoption, rising fuel efficiency, and inflation, which erodes transportation budgets. Some states have suspended fuel taxes, including Georgia, and others like Ohio have discussed it, raising questions about how to maintain roads and bridges. Mileage-based user fees (MBUF): Derr's report examines the four states with permanent programs: Utah, Virginia, Hawaii, and Oregon. He says a mileage fee ties revenue directly to road use, unlike a per-gallon tax. The biggest practical barrier is that collection costs remain higher than the fuel tax's. What each state does well: Derr says an ideal program would combine Virginia's scale, Oregon's privacy protections, Hawaii's use of existing annual vehicle inspections and odometer readings, and Utah's fiscal discipline. Hawaii's geography also helps, since few drivers leave the state. In-state vs. out-of-state miles and privacy: GPS-based options record mileage, strip personal identifiers, and report only in-state and out-of-state totals, while odometer readings offer more privacy but less precision. Oregon is Derr's "gold standard": its statute requires data deletion within 30 days of payment or dispute resolution and keeps only aggregate data. He also recommends requiring a warrant for law enforcement access and writing privacy protections into statute rather than agency rules, even during pilots. Replacement, not an add-on: Derr says the fee should replace the gas tax rather than add to it, though some states are considering applying it only to EVs. He says it's still too early to know how the programs will play out. Greg Bishop raised the concern of drivers facing federal, state, and mileage taxes on top of sales tax, as in Illinois, which doubled its gas tax from 19 to 38 cents with annual inflation increases. Should a mileage fee replace the gas tax, and should privacy be the top concern? Leave your thoughts in the comments. #GasTax #MileageTax #DieselPrices #TransportationPolicy #CenterSquare #TheStates