Can taxing trucks on miles traveled work? – FreightWaves
A user fee to raise money for roads and bridges that is based on the number of miles a truck travels is popular among policymakers but does not sit well with industry lobbyists.
Unlike taxes on gasoline or diesel, a fee based on vehicle miles traveled (VMT) gets much closer to capturing the externalities and to approximating the road maintenance cost of each driver, according to the Tax Foundation, an independent tax organization that has opposed increasing traditional taxes, such as fuel taxes.
Four states Kentucky, New Mexico, New York and Oregon are already levying a commercial truck VMT fee. At the federal level, a VMT tax on trucks could also be a substitute for existing taxes on trucks that are credited to the Highway Trust Fund (HTF), the main source of money for maintaining roads and bridges.
In a 2019 study, the Congressional Budget Office (CBO) pointed to three areas that would have to be addressed by lawmakers before a federal VMT tax on trucks could be rolled out:
Of the four states with truck VMT taxes, Kentucky charges a flat rate of about 3 cents per mile, and the other three charge rates that vary by trucks weight, ranging from about 1 to 29 cents per mile, according to CBO.
Because most trucking companies already track their vehicles, the Reason Foundation, a libertarian think tank, argues that implementing a VMT tax on only commercial trucks would require overcoming fewer administrative and privacy hurdles than implementing such a tax on all vehicles.
However, putting a federal VMT fee in place would impose greater costs on the federal government and trucking companies than increasing existing taxes, CBO pointed out in its study.
A study published earlier this year by the American Transportation Research Institute (ATRI) put a price tag on those costs: upwards of $20 billion.
The trucking industrys most powerful lobbying group, the American Trucking Associations (ATA), which favors raising fuel taxes to strengthen the HTF, has long been wary of a federal VMT tax particularly one that would apply only to trucks.
Testifying at a Senate hearing on Tuesday, ATA President and CEO Chris Spear warned not only of the high costs, but of problems with tracking the tax through an ELD. Federal regulatory requirements for these devices were designed to ensure an accurate record of hours driven, not the number of miles driven, Spear said. Nor do the requirements provide an ability to broadcast data to taxing authorities. Furthermore, most commercial vehicles 72% are not required to be equipped with recorders.
Spear also pointed out that even strong supporters of a VMT tax acknowledge that full implementation is still a decade away. Failure to provide interim funding for urgent surface transportation needs while these solutions are developed would be highly irresponsible.
Despite its proposal to raise taxes to pay for infrastructure, the Biden administration has publicly been open to user fees as well.
When U.S. Rep. Doug LaMalfa, R-California, who represents a rural district in the northern part of the state, raised concerns in March at a congressional hearing that a VMT tax could disproportionately harm small truckers in his district, Secretary of Transportation Pete Buttigieg acknowledged the problem but did not dismiss the possibility of a VMT fee.
Whats really driving this is the awareness that as vehicles become more fuel-efficient or move off gasoline entirely we need to make sure that if were on a user fee system that theyre somehow paying in, Buttigieg testified.
The gas tax was the simplest way to have a user fee because we used to know for a fact that the more you drove, the more gas youd use. Now its not that simple. There are a lot of ways we can think about setting up [a VMT], whether its a rebate mechanism or a phase-in approach so that its not disproportionately hurting those who are already hard-hit.
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Can taxing trucks on miles traveled work? - FreightWaves
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