Minnesota Department of Administration | November 16, 2004

Like Oregon, California may consider implementing a mileage tax. California’s newly appointed director of the Department of Motor Vehicles, Joan Borucki, is a long-time advocate of the mileage tax.

The mileage tax is seen as a solution to raise transportation revenue for the cash-strapped state. Between 1998 and 2005, revenue from gas and diesel fuel tax is expected to fall by 8 percent when adjusted for inflation. For the same period, the amount of miles traveled by cars and trucks on California roads is expected to increase by 16 percent.

California will be closely watching technology being tested in two pilot programs. In Oregon, tracking devises are sending a signal to a GPS satellite and that information is used to calculate the tax bill. The information is then read by other technology at the gas pump. In Seattle, the Puget Sound Regional Council is placing global positioning devises in 500 cars to monitor where they drive, and then taxes are calculated based on a usage fee for each of the roads they use and the times they drive.

The Seattle technology has the potential to charge drivers based on the type of street they drive on. For example, large trucks could be charged higher fees for using residential streets rather than more fortified freeways, while cars could be pay less per-mile for driving on city streets rather than highways during peak hours.

Privacy advocates are especially concerned with the idea that the government could track the movements of all California drivers. Officials counter, however, that they are simply attempting to treat driving like water—by metering volume and the time of usage.