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OREGON TRANSPORTATION TAXES
Oregon’s constitutionally dedicated State Highway Fund derives most of its revenue
from three major highway user taxes: vehicle registration fees, motor vehicle fuel
taxes (primarily the gasoline tax), and motor carrier fees (the weight-mile tax).
The basis of each of these taxes is governed by the concept of cost responsibility.
This three-tiered tax structure is designed to collect a fair share of revenue from
each user.
Another major funding source for Oregon transportation projects comes from the Federal
Highway Trust Fund. The State receives an amount from the federal government, equivalent
to about 55% of the amount of the three-tiered tax structure levied by the State,
to be used by the State for highway and transit projects following the guidelines
of the Transportation Equity Act for the 21st Century (TEA-21). This is not discussed
further because it is a revenue source the collection of which is not under control
of the State of Oregon.
Road user taxes were initially levied in Oregon against motor vehicles to cover the
costs of registration. A one-time fee of $3 was instituted in 1905. Since this proved
to be a productive source of revenue, the state soon annualized the fee and began
to increase the rates, using the proceeds to finance highways.
The registration fee is considered payment for the fixed or non-use-related costs
of providing a highway system. These costs include minimal maintenance of facilities
and equipment along with certain administrative functions necessary to keep the system
accessible. Since these fixed costs account for only a small portion of total highway
costs, the registration fee in Oregon has traditionally been low (for both cars and
trucks) in comparison to the corresponding fees in most other states.
The second tier in the Oregon system is the fuel tax. In 1919, Oregon became the
first state in the nation to enact a fuel tax on gasoline. It was regarded as a true
road user tax since those who used the roads more paid more. Due to the direct link
between usage and tax payments, the fuel tax came to be viewed as the most appropriate
means of collecting the travel-related share of costs for which cars and other light
vehicles are responsible.
The state fuel tax was extended to diesel and other fuels in 1943. Since that time,
the tax on diesel and other fuels, referred to as a ¡use fuel tax,¢ has been at the
same level as the tax on gasoline.
Although the fuel tax is applied to both gasoline and diesel (and other fuels), diesel-powered
trucks subject to the Oregon weight-mile tax are NOT subject to the state fuel tax.
Prior to 1990, the weight-mile tax rates for gasoline-powered trucks were lower than
those for diesel-powered trucks to account for the fact that operators of gasoline-powered
trucks meet a portion of their responsibility through payment of the fuel tax. Legislation
enacted by the 1989 Legislature eliminated the separate schedule of rates for gasoline-powered
vehicles. Operators of gasoline-powered trucks subject to the weight-mile tax are
now allowed to credit their documented fuel tax payments against their weight-mile
taxes due.
The third tier in the Oregon system is the weight-mile tax. Oregon’s first third-structure
tax was put into effect in 1925 in the form of a Aton-mile tax.@ This tax was used
to cover the responsibility of the growing number of trucks and buses that were appearing
on the public roadways at that time.
Oregon’s first weight-mile tax was enacted in 1947 and implemented in 1948. The tax
applies to all commercial motor vehicles with registered gross weights in excess
of 26,000 pounds. It is based on the registered gross weight of the vehicle and the
distance it travels in Oregon.
The weight-mile tax is a use tax that takes the place of a fuel tax on heavy vehicles.
Although fuel consumption increases with vehicle size and weight, it does not increase
proportionately with cost responsibility. The per-mile cost responsibility of a typical
truck operating at 80,000 pounds, for example, is more than double that of a typical
truck operating at 60,000 pounds. The 80,000 pound truck, however, uses only about
five percent more fuel for the same amount of travel. Thus, fuel consumption alone
cannot adequately reflect the cost responsibility of vehicles of different sizes
and weights.
Vehicle registration fees and other charges unrelated to the amount of highway use
are even more seriously deficient in reflecting cost responsibilities. Such fees
cannot reflect variations in travel by the same vehicle from year-to-year or variations
in mileage between vehicles of the same type and weight.
The Oregon weight-mile tax system actually consists of a set of weight categories
and alternative flat-fee rates. There are separate categories for vehicles registered
at gross weights of 26,001-80,000 pounds, in increments of 2,000 pounds, and those
operated under special permit at weights above 80,000 pounds. Additionally, log,
sand and gravel, and wood chip haulers, along with farm truck operators, have the
option to pay monthly flat fees in lieu of the mileage tax.
Since 1990 carriers operating vehicles under special permit at gross weights in excess
of 80,000 pounds now pay a weight-mile tax based on a vehicle’s registered gross
weight and number of axles (ATable B@ rates). There are separate schedules for five,
six, seven, eight, and nine or more axle vehicles, with each schedule graduated by
gross weight. The rates are structured so that, at any registered gross weight, carriers
can qualify for a lower per-mile rate by utilizing additional axles.
In summary, Oregon has for many years been dedicated philosophically to a cost-based
approach to road finance known as cost responsibility. A balanced mix of registration,
fuel, and weight-mile taxes is used to capture the cost responsibility of vehicles
of different sizes and weights and to equitably charge both high and low mileage
vehicles.
[Most of this is repeated from the AOregon Highway Cost Allocation Study@ July 1,
1999 also presented in prior cost allocation studies.]
