A New Colorado Road Tax On The Horizon: A Pay Per Mile Solution?

Like many states, Colorado uses its gas tax to aid in road and bridge repair. However, the department of transportation is consider a new Colorado road tax to help aid in infrastructure repair. 

Could a pay-per-mile tax be on the horizon in Colorado? It’s definitely possible. Over 100 volunteers aided in a pilot program last year to test the validity of a pay-per-mile tax.

“I think we can all agree that the roads are extremely bad, so how are we going to pay for that?” she said. “If the gas tax isn’t covering all that, what does it look like to cover the cost of improvement?” – Maggie Bolden, program volunteer and Colorado resident.

Testing It Out

Over the course of four months, volunteers were given the option of recording their mileage or adding a tracking device to their vehicle. Now, the results are coming in.

The Colorado Road Usage Charge Pilot Program (RUCPP) has determined that on average, a majority of the more than 100 participants owed $10 or less per month in road usage charges. This amounted to about $4.25 cheaper than the average of what they paid in gas taxes during the same period.

This estimation was based on the following assumptions:

  • Federal gas tax is $0.184 per gallon
  • Colorado state gas tax is $0.22 per gallon
  • The Colorado RUCPP RUC rate is $0.012 per mile driven
  • Rates are rounded to the nearest hundredth decimal

Clearly, the proposed Colorado road tax on mileage is proposing a rate that is far below both federal and state gas tax. However, the assumption that residents would owe less is based on a few variables, most notably the year, make, and model of vehicle being driven.

There are concerns regarding how such a tax would impact rural as well as low-income communities. For now, experts say more research is needed.

“The main goal is to do the adequate research so if decision makers decide road usage charging is a road usage alternative that they would like to deep explore, they have all the information they need to have that conversation,” CDOT’s Tim Kirby said.

Why Is a New Tax Necessary?

Colorado is currently booming. A growing tech sector and population growth are benefiting the state greatly. However, with more fuel-efficient vehicles on the road, the current gas tax has fallen short of funding the infrastructure needs of Colorado. However, the pay-per-mile proposal faces a few issues.

For one, it is being proposed as a replacement for the gas tax. Given that the early findings are indicating that residents would pay less than they currently do in gas tax, it’s hard to envision how replacement would benefit Coloradans. Simply put, if the gas tax isn’t enough to fund what is needed, replacing it with a tax that would generate less won’t work either.

Secondly, it’s not an equal tax. As one Denver Post reader opined: 

With the gas tax, heavier vehicles automatically pay more, as they get fewer miles per gallon. If this proposed mileage tax does not address this issue, won’t drivers who have more efficient lighter vehicles actually be subsidizing heavier vehicles?

“A gas tax is anonymous and fair,” said another resident, echoing concerns that the pay-per-mile tax amounts to a punishment tax on vehicles which aren’t as efficient.

Still, there are concerns over how such a tax would even be implemented. Would residents be required to track and report mileage? Install a tracking device in the vehicle? What about out of state drivers?

Obviously, there is still a lot of research to be done before anything is implemented for sure.

A Tale of Taxes

Whatever Colorado decides, it’s clear that new taxes may be on the horizon. Even a small increase in taxes owed can have a large impact on cost of living. That’s why City vs City accounts for all major state and local taxes when calculating cost of living.

Our app examines major taxes, after-tax income, housing and transportation costs, and more. As a result, we provide an accurate look at your true living costs down to the zip-code level.

Thinking of moving? If you’re living in Colorado and want to see how your cost of living stacks up against another city; download the City vs City app and start comparing cities today!