USDOT Secretary Signals Support For Vehicle Miles Traveled Tax Despite Privacy Concerns
Washington D.C. – United States Department of Transportation (USDOT) Secretary Pete Buttigieg is signaling his support for imposing a vehicle miles traveled (VMT) tax as lawmakers consider ways to fund an expected $3 trillion infrastructure bill.
On Friday, Sec. Buttigieg told CNBC he believes a VMT tax “shows a lot of promise.”
“I think a [VMT tax] shows a lot of promise if we believe in that so-called ‘user pays principle’… the idea that part of how we pay for roads is you pay based on how much you drive,” Sec. Buttigieg said. “The gas tax used to be the obvious way to do it. It’s not anymore, so a so-called vehicle miles traveled tax or mileage tax or whatever you want to call it could be a way to do it.”
Transportation Secretary Pete Buttigieg says taxing drivers by the mile “shows a lot of promise” and could be a way to fund a big infrastructure overhaul. pic.twitter.com/fkI5nWt7sr
— The Recount (@therecount) March 26, 2021
The Secretary supported the VMT tax during his brief run for the presidency in 2020.
However, as recently as his Senate confirmation hearing earlier this year, he acknowledged concerns from critics that government tracking drivers via GPS is fraught with legal questions regarding constitutionally guaranteed privacy rights.
Federal implementation of such an initiative would undoubtedly be challenged in the courts and would likely result in a protracted legal battle.
A number of trucking groups including the industry’s most powerful lobbyist, the American Trucking Associations (ATA), has urged Sec. Buttigieg and U.S. lawmakers to support increasing the federal fuel tax instead of moving aggressively to implement a VMT tax.
A primary reason ATA prefers an increase to the federal fuel tax instead of the VMT tax is the comparative costs of administering and collecting the taxes.
Earlier this month, the American Transportation Research Institute (ATRI) released a study which found that replacing the federal fuel tax with a VMT tax that is assessed on 272 million private vehicles could result in collection costs of more than $20 billion annually – or 300 times higher than the federal fuel tax.
According to ATRI, the central reason for this large increase in costs is the shift in collection points – from a couple hundred fuel terminal operators to every registered motor vehicle in the U.S.
Additionally, the report found that hardware costs alone would have an initial price tag of $13.6 billion and require ongoing replacement, telecommunications costs would be approximately $13 billion annually, and account administration would be an additional $4.3 billion each year.
ATRI also estimated that on top of these costs, credit card transactions for electronic payment and even the shipping costs for the hardware could each cost more than $1 billion.
Proponents of the VMT tax argue relying on tax revenue generated from diesel fuel and gasoline consumption to fund infrastructure maintenance and development is not a long-term solution due to the expected widespread adoption of electric vehicles in the next decade.
Meanwhile, the Biden Administration will roll out its massive $3 trillion infrastructure plan next week.
In addition to the whopping price tag, it will reportedly come packaged with a slew of new tax increase proposals.
TransportationNation.com will be tracking it for you.