Vehicle Miles Traveled Tax

The Highway Trust Fund has been funded majorly by the fuel tax. However, this trust fund cannot independently cover the federal government’s expenditures on roads and transportation. Therefore, the Senate Finance Committee has been interested in finding a solution to the inherent insolvency problem.

Apparently, the fuel tax system might not be enough to provide revenue for the Highway Trust Funds. On May 18, 2021, Texas Senator John Coryn proposed The Truck-only Vehicle Miles Traveled Tax to the committee. With this tax system, truckers will pay $25 per mile driven. However, the entire trucking industry has fiercely opposed this proposal since then.
Here are some reasons why:

In a letter addressed to the Committee, the leaders of the American Trucking Associations (ATA) and Owner-Operator Independent Drivers Association (OOIDA) highlighted the loopholes in the potential VMT tax system. There, they expressed their concerns about the discriminatory nature of the tax, which only applies to truck owners as opposed to other road users.

However, Coryn attempted to justify the fairness of the proposed policy by claiming that car users already subsidize road use by heavy trucks. Accordingly, this implies that truck-only VMT tax was the compensation the trucking industry had to pay. On that note, the OOIDA and ATA strongly disagreed with the senator.

Todd Spencer, ATA president, and Chris Spear, OOIDA president in the letter expressed that the industry is already responsible for almost half of the total Highway Trust Fund. They lament that an average car pays only $93 yearly. In comparison, the average 5-axle truck pays $4,454 yearly in federal fuel tax.— that’s 48 times more than what passenger cars pay!

Furthermore, they highlight another loophole in the implementation of the proposed policy. Coryn suggests that Electronic Logging Devices should be used to track the miles covered by trucks. However, the use of ELDs for this purpose is against Federal law— ELD can only be used to track compliance with the Hour of Service Regulations.

Besides, a report released by ATRI makes further revelations about the high cost of maintaining this tax system. Although the VMT tax is predicted to generate more revenue than the fuel tax, the high cost spent on hardware, telecommunication, and account administration, makes it inherently uneconomical. Roughly, the collection procedure implemented on over 270 million trucks would cost nothing less than $20 billion yearly.

Therefore, although this tax system already operates in Illinois, the letter highlights that it will “pose serious economic costs” that will be felt across all states and districts if implemented on the entire U.S. economy. Moreover, it is inequitable on the trucking industry and making it a compulsory federal tax is “mind-boggling,” as noted by Chris Spear, ATA President.

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