Technological Change and the Lowest Common Denominator Problem: An Analysis of Oregon's Vehicle Miles Travelled Fee Experiment
23 Pages Posted: 5 Jul 2011 Last revised: 7 Jul 2011
Date Written: February 1, 2011
In 2003, the state of Oregon began preparing an approach for replacing the state motor fuel tax with a Vehicle Miles Travelled (VMT) fee. This experiment promised a flexible platform of taxation allowing for long run innovation. This paper discusses some of the challenges associated with a nationwide application of the VMT fee, and suggests that local experimentation with different technological solutions for the implementation of a VMT fee will avoid one-size-fits-all solutions, called the lowest common denominator problem. In order to replace the motor fuel tax the VMT fee must respond to a variety of issues that, if ignored, cause unintended consequences. These include changing the incentives affecting choice over vehicle type. This paper responds to the policy implications of the Oregon experiment for state level policy makers primarily, but offers a vision for an organic response to technological change that is already underway. The debate over national policy becomes secondary to activating the process of experimentation at the local level. A role for leadership is outlined.
Keywords: Vehicle Miles Travelled Fee, Policy, Innovation, Planning
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