Congress Eyeing ‘Transformational’ Vehicle-Miles-Traveled Tax in Upcoming Highway Bill
Washington D.C. – Federal lawmakers are currently considering proposals to impose a vehicle-miles-traveled (VMT) tax on all passenger vehicles and heavy trucks as part of legislation to reauthorize funding for surface transportation.
Just as the battle over President Joe Biden’s $2.25 trillion infrastructure spending plan is heating up on Capitol Hill, members of Congress are also eyeing ways to increase revenue into the Highway Trust Fund (HTF).
In a U.S. Senate Committee on Environment and Public Works hearing on Wednesday, both the chairman, Sen. Tom Carper (D-DE), and ranking member, Sen. Shelley Moore Capito (R-WV), expressed interest in including a VMT tax into the upcoming surface transportation reauthorization legislation — often referred to as the “Highway Bill.”
“I think this is something that it seems like we have bi-partisan, very large, interest in and something we ought to really consider as we’re moving forward,” Sen. Capito said.
In a statement laying out the priorities he wants to be included in the Highway Bill, Sen. Carper made clear his support for moving to a user-based system.
“Things worth having are worth paying for,” he said. “Those who use our roads have a responsibility to pay for them.”
According to the non-partisan Congressional Budget Office (CBO), the HTF will be out of funds by 2022 and will incur a shortfall of $195 billion over the next ten years if revenue is not increased.
Major trucking groups such as the American Trucking Associations and Truckload Carriers Association have long advocated for increasing federal taxes on gasoline and diesel fuel.
These groups argue doing so would be the most effective and efficient way of increasing revenues into the HTF.
Dr. Joseph Kile, CBO’s director of microeconomic analysis, seemed to offer support for that position at Wednesday’s hearing.
“It’s important to note that implementing a new tax would require resolving several practical steps to assess and collect the tax and implementing new taxes would probably be more costly to the government than increasing existing ones,” he testified.
Conversely, proponents of the VMT tax argue relying on tax revenue generated from diesel fuel and gasoline consumption is not a long-term solution due to the expected widespread adoption of electric vehicles over the next decade.
Dr. Patricia Hendren, executive director of the Eastern Transportation Coalition, and supporter of moving to a VMT tax, testified imposing such a system would be a “transformational way to fund our infrastructure.”
VMT Tax Remains Unpopular
Most truckers are strongly averse to a VMT tax especially if it would be levied in addition to other taxes placed on the trucking industry like the heavy vehicle use tax (HVUT), International Fuel Tax Agreement (IFTA) taxes, and 12% federal excise tax (FET) on purchases of new equipment.
The general motoring public has, so far, also not been receptive to a VMT tax.
Many people have privacy concerns, plus a slew of legal questions remain regarding the constitutionality of a VMT taxation model.
Such a system could allow the federal government to track drivers via GPS and would undoubtedly be challenged in the courts resulting in a protracted legal battle.
The broad unpopularity of a VMT tax was evidenced most recently when United States Department of Transportation (USDOT) Secretary Pete Buttigieg received fierce backlash after signaling his support for moving to a mileage-based revenue approach.
It was so bad in fact, a USDOT spokesperson issued a statement within 48 hours seeking to clean up Sec. Buttigieg’s comments and clarify that a VMT tax was “not under consideration by the White House” as part of its infrastructure spending plan.
At that time, Transportation Nation Network reported VMT tax proposals, as well as a trucks-only VMT tax measure, remained “very much on the table” as part of negotiations on the Highway Bill.
The mark up on the Highway Bill will begin in May and a vote in the House and Senate on the final version is expected in September.
You can be certain TransportationNation.com will continue to follow it closely.