Household Income and Vehicle Fuel Economy in California

This white paper presents the findings from an analysis of the fiscal implications for vehicle owners of changing from the current statewide fuel tax to a “road user charge” (RUC) based on vehicle-miles traveled (VMT). Since 1923, California’s motor vehicle fuel tax has provided revenue used to plan, construct, and maintain the state’s publicly funded transportation systems. Over time, improvements in vehicle fuel efficiency and the effects of inflation have reduced both the revenue from the fuel tax and its purchasing power. Thus, there is growing interest among policy makers for replacing the state’s per-gallon fuel tax with an RUC based on VMT. This study analyzes the 2010-2011California Household Travel Survey (CHTS) to identify the potential effects this policy change would be likely to have on households across the state. The analysis found that while daily household fuel consumption and VMT both appear to increase with household income, urban and rural households show roughly the same amount of fuel consumption and VMT. No statistically significant difference in cost was found between the two programs in any income group. This suggests that an RUC designed to collect the same amount of revenues statewide as the current fuel tax would not place a significant financial burden on California households