Unique vehicle tax offers new way to raise funds

Posted in: Highways, Infrastructure

GPS-body-300x200Saying that fuel-efficient cars cause problems for the transportation industry may sound like a contradiction. Yet the less money consumers spend on gas, the less money goes into funding for infrastructure repairs. As we’ve discussed, gasoline taxes are the sole source of funding for the Highway Trust Fund. To combat the lack of money for projects, some lawmakers are pushing for a “vehicle miles traveled” tax, an alternative that has the ability to replenish the Highway Trust Fund faster than revenue from gasoline taxes.

In theory, the VMT system charges vehicle owners a fee based on how many miles they’ve driven rather than how much gas they buy. The idea is that drivers who use the roadway more often should be charged accordingly for its upkeep. This bypasses the increasingly outdated notion that the amount of gas used is equivalent to the amount of miles driven, as hybrid and electric cars only consume a fraction of the fuel to travel long distances.

To implement the VMT system, cars are outfitted with a GPS system that tracks their mileage. Drivers then pay for the amount of miles they drove using a predetermined price-per-mile. This type of tax is relatively new in the United States and has only been fully implemented with freight trucks. Some state agencies have completed non-commercial vehicle studies to determine whether or not the VMT system would work on a large-scale basis. On the whole, the research shows surprising feasibility.

What makes the VMT system an attractive option is flexibility in implementing the system. Fees can be collected yearly, or drivers can pay their fee in smaller increments. The means of fee collection can vary as well. Some studies chose to have the mileage data uploaded to a gas pump, so drivers paid for the VMT tax while they paid for fuel just as they would have with the fuel tax system. Other studies allowed volunteers to pay online.

While some have hailed this method as the vehicle tax system of the future, others are more cautious. Some concerns have been raised about whether or not the government will have access to individual’s movements via GPS data. Environmentalists are also decrying this option, as the lower cost of driving with a fuel-efficient car is what drives consumers to buy eco-friendly vehicles.

While changing the way drivers are taxed is a monumental undertaking, there is no denying that a VMT tax would help alleviate the scarcity of transportation project funding. Keep checking back with us to learn more about transportation funding options and how agencies implement these options to create more funding.

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