CA Offers Money to Drivers Who Test Out New Gas Tax Alternative

By: Ben Campbell | Published: May 26, 2024

Gavin Newsom’s California is set to trial a new program that aims to replace the traditional method of taxing road users in an attempt to ensure all residents pay their fair share of tax.

Californians who apply to participate in the new “pay-per-mile” program, known as Road Charge, can receive up to $400. The state hopes this will be a fair and sustainable way to replace the current gas tax system.

California’s Dependency on Road Taxes

Like most states and countries around the world, California heavily depends on gasoline taxes to ensure sufficient cash flow for general road maintenance and repairs when necessary.

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However, as the Golden State continues to pivot towards electric and hybrid vehicles, officials have been actively engaged in devising a plan to replace the lost gas tax.

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The Traditional Gas Tax in California

On average, California residents spend around $300 yearly on gas taxes, most of which go towards road maintenance and transportation projects.

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In comparison, electric vehicle owners pay a yearly tax, which also goes towards road maintenance. However, this only amounts to around a third of what gas-powered vehicle owners pay.

A Drop in Annual Gas Tax Revenue

Due to the increased popularity of electric vehicles in California, state officials have noticed a drop in the annual revenue produced from gas taxes.

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A photograph of a tax official working from their desk

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This has led to much debate in recent years, and Golden State officials have decided that the best way to increase road tax is to eliminate the old system and implement a more modern option.

Two Trial Programs Are Set to Begin

After years of various trials and minor programs, Californian officials believe they have finally devised a fair and sustainable way to ensure everyone pays their fair share of road tax.

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Two trial programs are set to be implemented this year, which aim to tax Californians on the miles they drive annually rather than the fuel they consume. A second option would tax drivers on their vehicles’ fuel efficiency.

The New Tax Program

The new tax program trial is set to begin this August. According to reports, up to 800 residents will partake in the study.

A woman is pictured doing her taxes

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The pilot program will offer drivers in the Golden State up to $400 in gift cards to participate in the trial. All participants will begin paying the proposed mileage-based fee monthly.

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Everyone Pays Their Fair Share

According to Lauren Prehoda, the manager of the Road Charge program, the traditional method of taxing gasoline is outdated and leads to people paying more for their choice of vehicle.

A man is pictured standing at a gas pump

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“What’s happening right now as we see this growth in different types of vehicles… we’re seeing this increasing unfairness in what people are paying,” said Prehoda during an interview with The Los Angeles Times.

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Several Options to Report Miles

If selected, those who have signed up to take part in the trial this August will be notified in late July. After this, the participants will be asked how they would like to report their miles.

A man in a fancy shirt is pictured driving his car

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According to Prehoda, there will be several options. “Some are very low tech, some have a location-sharing aspect. It’s up to you to choose what you do,” she said.

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Fourth Attempt at Implementing a New Tax Program

The program, set to be trialed in August, will be California officials’ fourth attempt to solve the state’s tax problem.

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“This time, it’s unique because in the past, we haven’t actually collected money,” Prehoda said. She went on to explain that in this trial, the state will be trialing the collection process to ensure it is a reliable way to bring in taxes for the state.

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A Long Study

Over the past eight years, Prehoda revals state officials and experts have been engaged in coming up with ideas on how Californians could report their annual mileage and the best method of taxing residents on it.

a photograph of a male and a female working on a study together

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However, the Road Charge manager also added that they realize the new program could negatively affect those living in rural or tribal communities.

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The Final Stages of a Decade-Long Study

Prehoda revealed that the six-month trial will be the final stage of the nearly decade-long study. Following this, officials will decide how to implement the new road tax on a state-wide level.

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“As a state, we’ve been looking at this for ten years now,” she said. The initial stages of the pilot program began way back in 2016, at a time when transportation officials began testing how feasible the alternative tax payment scheme could be.

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Road Charge Manager Calls for Public Help

Prehoda took a moment to reach out to the Californian public to ask for their help in ensuring the new program works, which will solve a long-standing problem for the state.

A woman is pictured speaking into a microphone and is recorded by a camera

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“This is your opportunity to figure this out together with us, to solve an issue that the state of California has,” said Prehoda. She continued, “We all need good roads to get around.”

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