When to comes to figuring out how to pay for repairing, building and maintaining the nation’s transportation infrastructure, “taxes” has become something of a dirty word. But some industry experts haven’t given up on the idea.
The traditional method of paying for infrastructure projects has long been the national Highway Trust Fund, fed mostly by a federal tax on gasoline and diesel fuel purchases. Last year, the HTF had total revenues of around $43 billion, not nearly enough to fund the massive number of projects needed to shore up and expand the nation’s roads, bridges, railroads, waterways, ports and mass transit systems. The latest of countless attempts over the years to achieve that objective is the $1 trillion infrastructure bill now wending its way through Congress. And while that bipartisan effort appears to have a better chance than previous efforts at being enacted, the question of where to get the money has yet to be fully resolved.
Even the measure’s strongest proponents agree that an increase in the fuel tax, which has stood at 18.3 cents per gallon of gasoline and 24.3 cents per gallon of diesel since 1993, is a non-starter. Even if they could overcome the aversion by many current lawmakers to just about any kind of tax increase, the value of the HTF is certain to degrade in the coming years as more drivers switch to electric vehicles. So does that mean it’s dead as a funding mechanism for infrastructure?
Not necessarily. An alternative to the gas tax is one that’s based not on fuel purchases, but on vehicle miles traveled (VMT). Such a fee would be a fairer assessment across all cars and trucks, and reflect more accurate usage of the transportation system by drivers.
Among the organizations supporting a VMT tax is the Bipartisan Policy Center, a Washington, D.C.-based think tank. Back in January, 2020, BPC recommended that Congress adopt the funding mechanism, along with one final boost in the gas tax to help bridge the transition.
The VMT tax isn’t a new idea. It has already been piloted in several states, including Oregon, Utah and Illinois (for trucks), and is also applied in various forms in a number of other countries. For it to catch on nationally in the U.S., however, lawmakers would have to abandon their reflexive opposition to any tax increase at all.
The idea of a VMT tax “wasn’t really on people’s radar until the [current] infrastructure package moved forward, and everybody was looking for pay-fors,” says Andy Winkler, director of the infrastructure project with BPC. Even now, he acknowledges, “there’s a real lack of understanding among the public about how it would work.”
BPC sees the shift from a gas to VMT tax as a necessary response to the steady conversion of passenger cars and fleets to electric power. “The people who use our transportation system should be the ones who primarily pay for it,” Winkler says. “It’s a more sustainable source of revenue for trust-fund programs moving forward.”
The first part of BPC’s proposal — enacting one last boost in the gas tax — is already essentially dead. “It’s a good idea,” says Winkler. “We haven’t abandoned ship. But it’s not likely to move forward.” Still, the infrastructure bill does include funding for a national VMT program, along with an advisory council of experts to help shape it, and resources for states to launch it.
Past pilots could help in garnering support. “My understanding is that the Oregon and Utah initiatives have gone relatively well,” says Winkler, “although there are a lot of issues to work out logistically.” Chief among them is how a VMT would be assessed in a manner that overcomes concerns about privacy. “That’s the tricky part,” he says, noting that the necessary data would have to be collected in a form that “isn’t person-specific, and removes identifying characteristics. There are technological ways to get around privacy issues.”
Other potential objections to the idea include the claim that it’s overly burdensome on rural drivers, who tend to travel farther than their urban and suburban counterparts, and doesn’t account for the extra wear and tear caused to the roads by trucks.
The Biden Administration, which spearheaded the current infrastructure bill, has been vague about how it will be funded. According to the White House, the money will come from “a combination of redirecting unspent emergency relief funds, targeted corporate user fees, strengthening tax enforcement when it comes to crypto currencies, and other bipartisan measures.” Clearly, however, those sources aren’t enough to pay the total bill. Nevertheless, BPC and others supporting the VMT concept must convince Congress and the public that some kind of targeted tax increase is needed.
“We still think a VMT tax is the way to go,” says Winkler. “You hope to use this time to make good policy. This is one that’s still relatively under the radar, but there’s still time to address some of those fundamental concerns about how it works. That’s what pilot programs are all about.”