Examining substitutes to the current state and federal gasoline and diesel fuel excise taxes has become a pressing issue, exacerbated by the rise of high-efficiency and alternative-fuel vehicles threatening the revenue-generating capacity of these taxes. A mileage-based user fee has been frequently proposed in the literature as an alternative that would offer greater benefits to rural and low-income populations than to urban and higher-income populations. However, most prior analyses relied on small data sets and aggregated data. This study examined the impact of replacing the Vermont state fuels tax with a revenue-neutral, mileage-based user fee using mileage and fuel economy data for over 300,000 registered passenger vehicles. It was found that, on average, Vermont households would pay an additional $23 per year, with rural households and low-income households facing smaller tax burdens than their urban and high-income counterparts. The impact of a $180 flat fee replacing the Vermont state motor fuels tax was also examined owing to state interest. Findings indicated that a flat fee would result in much larger price fluctuations, with most households paying an additional $47 per year. The disaggregated data approach presented here directly addresses public misconceptions of inequitable cost differences and provides context for public education campaigns to garner mileage-based user fee policy support. Based on the results, there is political ground for further research into the implementation of a mileage-based user fee, including the logistics of an administrative transition to mileage charging and the associated program implementation and technological costs.
