Assessment of Economic Impacts of Vehicle Miles Traveled Fee for Passenger Vehicles in Nevada

This study evaluated the effectiveness and equity of a Vehicle Miles of Traveled (VMT) fee in Nevada for passenger vehicles. The effectiveness of this fee was evaluated, taking into consideration the collection capabilities as well as its impact on the amount of miles driven by the users. Equity was evaluated by considering the impact of the VMT fee on various population groups, based on socioeconomics, demographics, household type, location, and the ownership of fuel-efficient vehicles. To estimate the impacts on various VMT fees, a linear regression model was developed using data from the 2009 National Household Travel Survey that provided a mechanism to estimate VMT in Nevada as a function of the cost to drive, among other characteristics. The effectiveness and equity of two alternative VMT fees were compared to the existing fuel tax system. These fees were calculated based on the average fuel efficiency of vehicles in Nevada and the historical revenue from the state fuel tax. In general, a VMT fee of 3.3 cent/mile seems to be more effective than both the existing fuel tax and a VMT fee of 2.91 cent/mile. Although the 3.3 cent/mile has a slightly greater impact on various population groups, its equitable distribution of the tax burden among 71.1% of households creates a small average cost increase of just 0.37% per household. Thus, a 3.3 cent/mile fee would provide the necessary revenue without significantly affecting Nevada households.