Vehicle Miles-Traveled (VMT) Tax
With a massive infrastructure bill looming as the next item on the legislative horizon, talk of replacing the gas tax in an possibly electric car future with a Vehicle Miles-traveled, or VMT Tax, is coming into vogue.
The Oregon task force put the state at the forefront of the new approach, known as a road-user charge or a vehicle miles-traveled (VMT) tax. The state launched a voluntary program in 2015. Legislators in Salem are considering a bill that would make the program mandatory for new vehicles with a fuel economy rating of 30 miles per gallon or higher starting in 2026.
State Rep. John Lively (D), the bill’s sponsor, said the state has demonstrated that a program can work and that it is time to take the next step.
“If we don’t get the date set certain, we’re never going to get there,” he said.
Utah’s program was launched last year and has enrolled more drivers than Oregon’s. A dozen states are considering legislation this year to update, launch or study programs, including California — where the governor wants to end sales of gas-powered cars by 2035 — and Wyoming.
“We’re in the beginning, the very beginnings of the tangible transitions to this now,” said Douglas Shinkle, transportation project director at the National Conference of State Legislatures. “There’s a lot of palpable excitement.”
At the federal level, the idea of taxing mileage has gained traction in both parties as leaders promise an infusion of spending on transportation infrastructure, even as lawmakers disagree on how to pay the bill.
The federal government has issued tens of millions of dollars in grants to back state projects exploring mileage-based tax programs. A bill that passed the House last year would have set up a national pilot program to tax vehicles by miles driven, and a Senate committee endorsed the idea. The Federal Highway Administration is beginning to explore how a pilot program might work, a spokeswoman said.
Sales of electric vehicles account for about 2 percent of annual new-car sales, with some forecasts projecting that number to grow rapidly.
The 18.4-cent federal gas tax was last raised in 1993. By 2008, Congress was shifting other money into the Highway Trust Fund to make up for shortfalls.
The gas tax brought in about $26 billion and a tax on diesel an additional $10 billion in 2019, before the coronavirus pandemic pushed down the number of miles Americans drove. The Congressional Budget Office forecast in May that gas-tax revenue would decline about 1 percent each year as fuel economy improved and growth slowed in the number of miles driven. At the same time, it projected that transportation-related spending would increase in line with inflation, leaving the highway fund increasingly out of balance…
…Bill Sullivan, executive vice president for advocacy at the American Trucking Associations, said if the idea continues to gather support at the federal level, he could see disagreements arising. Sullivan’s group supports boosting the gas tax before turning to a new way of raising money, but that idea has little traction in Congress…
“VMT has one thing going for it,” he said, “and that’s that it’s not the gas tax.”