THE ENVIRONMENTAL IMPACT OF MILEAGE TAXES: AN ECONOMIC ANALYSIS OF ROAD USER CHARGES

This paper seeks to answer what is the environmental impact of a tax on miles driven? This question comes during a time when Oregon piloted a mileage tax system and other states are proposing the same given expected infrastructure reforms, nationally. This paper will briefly explain the political economy of highway funding for context as to why the mileage tax is being explored. Primarily, this paper looks to analyze the environmental effect from a mileage tax as opposed to a fuel tax in light of Oregon’s climate targets. This section will conduct an empirical analysis of the OReGO pilot program. This paper will then explore the economic effect of a mileage tax that looks at how consumers may respond to the tax, what the environmental consequences of these responses are, and what difference in revenues exist for the state. The paper will make policy recommendations and explore other approaches to raising revenues for highways, such as increasing the fuel tax.