One of the goals for both the Biden Administration and Congress in 2021 is to pass a meaningful infrastructure bill before the FAST Act expires in the fall. Both Democrats and Republicans see this as a way to inject investment into the economy to give it a boost in the midst of the coronavirus pandemic. But one area that still sees significant disagreement is how to fund this investment.
If it seems that this topic has been discussed before, that’s because it has. Many times. Infrastructure funding mechanisms come up every time a highway bill, such as the FAST Act, needs to be reauthorized. This is because the current “pay for,” the federal fuel tax, has not been raised since 1993 and has not kept pace with inflation over the last 28 years, resulting in a massive deficit for the Highway Trust Fund.
While Democrats have historically supported a fuel tax increase, the new administration seems to be distancing itself from that stance. In his Senate Commerce Committee confirmation hearing, Transportation Secretary Pete Buttigieg seemingly voiced support for increasing the fuel tax. However, this was later walked back by his spokesperson, who said a “variety of options need to be on the table to ensure we can invest in our highways and create jobs, but increasing the gas tax is not among them.” Rep. Earl Blumenauer (D-OR-3), who was one of the biggest congressional backers for increasing the federal fuel tax, also reversed his support after Secretary Buttigieg’s hearing.
The most prominent alternative to the federal fuel tax is a vehicle miles traveled (VMT) tax. This revenue collection method is attractive to many policymakers who are concerned that the increased prevalence of fuel-efficient and electric vehicles on our nation’s roadways presents a scenario in which fuel tax revenues will steadily decline over time, eventually becoming nonexistent. Most stakeholders recognize that the fuel tax is not sustainable in its present form over the long term, but there are many roadblocks that currently exist to the transition to a VMT.
TCA advocates for an increase to the federal fuel tax now to make up for the funding shortfalls, but we recognize that a transition to VMT in the future may be inevitable. However, before a VMT is implemented, several obstacles must be overcome. Most concerning is the high potential for dual taxation and fraud under a VMT, the lack of technological and administrative infrastructure to report and collect this tax, the significant overhead costs, and the legitimate privacy concerns from many motorists.
Furthermore, there is simply not enough data to support moving forward with a VMT at this time. We would encourage Congress to establish a nationwide pilot program to collect real-world information about the potential impacts a VMT could have before mandating the transition to this pay for. There are many unintended consequences that could arise from moving too quickly away from the fuel tax. TCA is concerned that without this pilot program data, a VMT will not be as successful or as fair as it potentially could be.
TCA has repeatedly raised these concerns in the past, but we will continue engaging with lawmakers over the coming months as they discuss an infrastructure bill and its funding mechanisms. We believe these conversations will be truly meaningful as lawmakers hear from the industry that this transition is possible, but only if the appropriate groundwork is laid first.
