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Some Details About the California Mileage Tax

While euphemistically called a Road Charge (or Road Usage Charge by SANDAG), the mileage tax is a plan to tax drivers based upon the miles they drive.

Originally touted as a funding replacement for the gas tax, the conversation seems to have shifted to where at least one local official openly admits it's really about changing people's behavior and getting them to drive less.

We did some digging into the proposed program due to details so far being quite fuzzy. While we got some specific information, there is still a LOT that remains 'to be determined.'

Here is the information from our email exchange with the folks at the State of California's Road Charge Pilot Program:

Dear Mary,

Great detailed questions! Please see below:

1. Are all of these options guaranteed/written into any regulations or legislation? Everything I have seen so far seems to be very fuzzy on details on how things would be tracked (this includes from SANDAG, my local MPO (Metropolitan Planning Organization.)

No legislation has yet passed to implement a statewide road charge. That does make some details unclear, as we don’t know what priorities the Legislature might put in their bill. We understand this can get frustrating at times!

2. So there are no other options to delineate out-of-state miles, other than being tracked?

There is no way to capture out of state miles without a location tracking option at a statewide scale. Each individual will be able to choose for themselves whether they find value in that more precise tax bill or feel more comfortable with a non-location tracking reporting option.

3. How will the TAX be collected?

Options, Options, Options! Taxpayers will be able to choose between multiple account managers and reporting tools. The account manager will receive the reported number of miles and create an invoice and the frequency the taxpayer chooses – annually, monthly etc. The taxpayer will send the payment (again, through multiple options!) to the account manager, who then deposits the money with the State.

4. What are the repercussions for people who don't pay (or whose payments get rejected?)

The enforcement process could be similar to the existing FasTrak enforcement process, where those who do not pay tolls due are referred to the DMV, and a hold is put on their vehicle registration.

5. How will ALL out-of-county/state/country drivers contribute? I know you mentioned the IFTA-type program, but that seems very problematic on several fronts, including: what if a state doesn't participate (i.e., Arizona); how can we force non-commercial drivers in Mexico to be tracked? The issue of the border with Mexico is an important one. Last year Congress passed a transportation bill which included a national RUC pilot, and we hope to work with the federal government and other states to dig into that question.

6. How will we avoid double taxation? i.e., Does the mileage tax only apply to electric vehicles? If not, how will drivers of gas-engine and hybrid vehicles avoid paying both a gas-tax and a mileage tax?

A credit for gas taxes paid based on the EPA rating of the vehicle can be deducted from the road charge due when the invoice is sent to the taxpayer. This will avoid double taxation during any transition period until the gas tax is fully sunsetted. Ultimately, switching California to a road charge would be decided by the Legislature. So keep an eye out in the future and be sure to voice your preferences with your elected representatives!

Thank you,

The Road Charge Program Team

* * * * * * * * * * *

To their credit, I have found the staff behind the curtain of the CA Road Charge Program website to be quite responsive to questions with timely replies and more specifics than local officials provide.

I encourage you to reach out to them with your own questions, as well as follow up on their advice to contact your individual representatives and make your feelings known.

[NOTE: IFTA stands for International Fuel Tax Agreement, a compact across 48 U.S. states and 10 Canadian provinces, which is touted as simplifying fuel taxes for truckers/truck companies that operate in more than one jurisdiction. You can learn more about it here.]


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