November 4, 2019 3:45 PM, EST

VMT Tax for Trucks Presents Revenue Option for Highway Account, CBO Reports

VMT TaxInterstate 80 in Nevada. (nevadadot via YouTube)

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About $2.6 billion in revenue would have been generated in 2017 if commercial trucks were taxed at a rate of 1 cent per mile, and compliance reached a rate of 90%, according to a recent report by the Congressional Budget Office.

About $1.6 billion in revenue would have been generated that year if the VMT fee was only applied to trucks with one or more trailers, added the report, which was published in October.

The funds generated via a VMT fee could be utilized to raise revenue for the Highway Trust Fund. The fund is used to assist states with highway projects, and it relies on dwindling revenue from the federal gas and diesel tax.

Options for recording the taxable mileage on vehicles include an odometer reading, which is likely to require little if any capital spending, per CBO’s summary of the report. Additionally, system-based radio-frequency identification readers mounted on gantries, roadside pillars or collection booths “would facilitate charging different rates by location and would have low costs for enforcement,” the summary noted. And, onboard devices, such as electronic logging devices, may be programmed to be compatible with location-related taxes.

CBO claimed in its assessment that VMT proposals have garnered interest recently, with several states and other countries applying the fee to commercial vehicles.

The report cautioned, however, that costs associated with implementing such a VMT fee likely would be higher for the federal government and trucking companies than the costs of raising taxes on gas and diesel fuel.

The report stated, “The costs to the government of implementing a VMT tax on trucks are uncertain but would be higher than the costs of the existing tax on diesel fuel. The distributional effects of a VMT tax would be essentially the same as those of the diesel tax.”

The Highway Trust Fund will be exhausted by 2022 without additional revenue or reductions in spending, as CBO noted. Per the report: “Sustaining [the trust fund] will require continued transfers from the general fund, reduced spending on highways and transit programs, increases in existing taxes on highway users, new taxes credited to the fund, or some combination of those approaches.”

On Capitol Hill, federal transportation leaders have examined the potentials of a broad vehicle-miles-traveled fee. A bill that gained bipartisan backing by a U.S. Senate committee over the summer proposed examining a nationwide VMT fee, as a way of funding highway construction and maintenance projects.

The legislation specifically called on the secretary of transportation to ensure officials “test the design, acceptance, equity and implementation of user-based alternative revenue mechanisms, including among differing income groups and among rural and urban drivers.” The bill goes on to call for conducting public education and outreach programs to “increase public awareness regarding the need for road usage fees or other user-based alternative revenue mechanisms for surface transportation programs.” Privacy protections are emphasized under the legislation.

In the U.S. House of Representatives, Rep. Peter DeFazio (D-Ore.), the top Democrat on the Transportation and Infrastructure Committee, has indicated he intends to propose a nationwide VMT pilot program as part of a highway reauthorization measure that could be considered as early as next year.

If a nationwide VMT system is approved, highway agencies likely would keep track of the drivers’ miles through either self-reporting, smartphones or onboard devices.

The Highway Trust Fund relies on revenue from a 24.4 cents-per-gallon diesel tax and 18.4 cents-per-gallon gas tax set in 1993.

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