Monday, September 14, 2009

Congress Contemplating Per Mile Vehicle Tax?

At a time when gasoline and motor fuel taxes are going to see declining revenues because vehicles become more efficient, new revenue sources have to be developed to cover transportation project costs.

That's where the per-mile vehicle tax (vehicle miles tax or VMT) comes into play. It would essentially tax vehicle usage for miles driven, such that cars that hybrid cars pay the same tax per mile as those that aren't. This has been an idea bandied about on the West Coast (particularly in Oregon), but now Congress has taken up that notion as well.
US Representative Earl Blumenauer (D-Oregon) introduced H.R. 3311 earlier this year to appropriate $154,500,000 for research and study into the transition to a per-mile vehicle tax system. The “Road User Fee Pilot Project” would be administered by the US Treasury Department. This agency in turn would issue millions in taxpayer-backed grants to well-connected commercial manufacturers of tolling equipment to help develop the required technology. Within eighteen months of the measure’s passage, the department would file an initial report outlining the best methods for adopting the new federal transportation tax.

“Oregon has successfully tested a Vehicle Miles Traveled (VMT) fee, and it is time to expand and test the VMT program across the country,” Blumenauer said in a statement on the bill’s introduction. “A VMT system can better assess fees based on use of our roads and bridges, as well as during times of peak congestion, than a fee based on fuel consumption. It is time to get creative and find smart ways to rebuild and renew America’s deteriorating infrastructure.”

In 2006, the Oregon Department of Transportation completed its own study of how to collect revenue from motorists with a new form of tax that, like the existing fuel excise tax, imposes a greater charge on drivers the more that they drive. The pilot project’s final report summed up the need for a VMT tax.
The bill would direct a study to examine implementing a VMT. It directs that $150 million be spent on studying the issue and making recommendations.

One of the rationales for gas taxes is to encourage people to drive less and choose more efficient vehicles. Hybrids excel at high fuel efficiency. Electric vehicles are even more effective, and if they are successfully introduced, it means even less revenues from motor fuel taxes are realized even if vehicle traffic doesn't diminish. Road usage takes a toll on infrastructure and such costs have to be funded. The problem is that a VMT eliminates the advantage that a hybrid has over a regular vehicle since both would be taxed the same. If the VMT is overlaid on top of existing taxes, that means that we'd have yet another regressive tax that hits lower income drivers hardest.

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