Investigating the Impact of VMT Tax Coupled with Congestion Pricing on Traffic Operation in Busan, Korea

The rapid diffusion of electric and other high-efficiency vehicles is weakening the fiscal sustainability of fuel tax-based transportation finance systems, while persistent urban congestion continues to impose substantial social costs. In this context, a vehicle miles traveled (VMT) tax has gained attention as a potential alternative to conventional fuel taxation. However, prior studies have primarily examined the VMT tax in terms of revenue generation, equity, and environmental impacts, with limited attention to its operational effects on urban traffic conditions.

This study addresses this gap by investigating the impacts of a VMT tax coupled with congestion pricing on traffic operation in Busan, Korea. To this end, this study develops an integrated analytical framework consisting of four components: identification of congested areas, estimation of flat-rate and congestion-based VMT taxes, development of a driver behavior model, and traffic impact assessment using microscopic simulation. The results show that the flat-rate VMT tax is estimated at 22.04 KRW/km, while additional congestion-based charges range from 8.0 to 24.7 KRW/km across selected districts in Busan.

Higher VMT charges significantly increase the likelihood of behavioral change, particularly mode shift to public transit. The simulation results indicate that both the flat-rate and congestion-based VMT taxes improve traffic operation compared with the existing fuel tax regime, reducing total travel time and increasing average travel speed. The congestion-based VMT tax yields greater improvements by inducing a larger share of drivers to adjust routes, departure times, or travel modes.

These findings suggest that a VMT tax can serve not only as a sustainable revenue instrument in the era of vehicle electrification but also as an effective congestion management tool when designed to reflect spatial and temporal traffic conditions. The results further imply that equity-sensitive pricing and complementary policies, including public transport enhancement and flexible work-hour arrangements, are essential for improving both the effectiveness and acceptability of VMT tax implementation.