Oregon wants to get rid of its gas tax and charge drivers by the mile instead

Oregon was the first state to implement the gas tax in 1919, and may be the first to abandon it.

Starting this month, Oregon drivers have the option to pay-by-the-mile for road usage instead of by how much gas they purchase.

OReGO, as the program is known, launched on July 1 with the a goal of enrolling 5,000 participants to test the three private partnerships set up by the state’s Department of Transportation for this trial run.

The scheme is designed to shift road tax revenues from a gasoline-based structure to what supporters believe is a more fair approach, given the increasing number of hybrid and electric vehicles.

Under the scheme, drivers will pay 1.5 center per mile driven in the state, and then receive credit on their bill for the 30-cents-per-gallon paid at the pump as state gas tax.

“Oregon and other states know that the gas tax drivers pay at the pump isn’t cutting it anymore,” said Oregon Department of Transportation Director Matthew Garrett in a press release.

“As newer cars squeeze more miles out of each gallon of gas, and more hybrid and all-electric vehicles are sold, paying for road use by the mile instead of by the gallon ensures that everyone pays their fair share – no more, no less.”

Average miles-per-gallon of vehicles in the United States has improved considerably, from just 16 in 1980, to over 24 mpg in 2013, according to the Bureau of Transportation Statistics. Portland, Oregon has the most hybrid cars registered of any American city.

Several other states, including Washington, California, Colorado and others, are considering similar programs.

NOW WATCH: Economist Jeff Sachs reveals the biggest threat to the human race

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.