VMT tax proposal would penalize rural states without substantial public transportation
Published 4:04 pm Tuesday, April 6, 2021
U.S. Transportation Secretary Pete Buttigieg stepped strongly toward, then beat a rather hasty retreat from the concept of including a vehicle mile traveled or VMT tax component as a means to pay for President Biden’s massive national infrastructure proposal.
Simply put, the VMT tax would raise transportation funds from the taxpayers by levying a tax on how many miles someone travels rather than how much gasoline they pump – which is the present system through federal and state gasoline taxes.
While Buttigieg generally won praise from members of Congress and political advocates from urban blue states, the VMT plan was widely panned by members from rural red states across the South and the Midwest – where rural taxpayers routinely drive long distances daily to work, to seek educations or medical care, and to engage in farm-to-market commerce.
There are multiple concerns about the VMT tax. Privacy is a huge concern as opponents object to GPS tracking devices, particularly in early iterations of the concept. Now, proponents say VMT tax can be levied without GPS devices based on other technologies or through an at-the-pump formula.
Other concerns on both sides of the VMT debate include the current exemption that drivers of electric cars enjoy from gasoline taxes. Not fair, says libertarian advocates. There are also fairness concerns about the disparities between those who can afford newer, more fuel-efficient cars compared to those driving older, less fuel-efficient vehicles.
The latter groups fill up more often and therefore pays more in federal and state fuel taxes.
Mississippi is an excellent example of the folly of the VMT. Saddling the taxpayers here – those with the lowest per capita income in the nation and the highest poverty rate – with the VMT tax would definitely negate Biden’s campaign pledge that those making less than $400,000 per year “won’t see one single penny in additional federal tax.”
But the VMT concept has been debated for a decade on Capitol Hill and there are existing programs in Oregon, Utah and Washington state. There are also pilot programs funded by the federal government in California, Delaware, Hawaii, Minnesota, and Missouri.
The federal and state gasoline tax system is failing on several fronts – Mississippi’s 18.4 cents per gallon (CPG) state gas tax is a flat tax. When we paid $3.965 a gallon for gas in 2008, the tax was 18.4 CPG. When we pay $2.58 per gallon at the pump this week, the state tax is still 18.4 CPG. The only way the state takes in more revenue in gas taxes is for the volume of gas consumed to increase – and automobiles are now manufactured to require less fuel consumption than a decade ago.
The federal fuel tax is likewise 18.4 cents per gallon and hasn’t changed since 1993. Neither the federal nor state fuel taxes have kept pace with inflation. Indexed for inflation, both federal and state fuel tax rates would be 33.4 CPG each and far closer to actually funding what’s needed to build and adequately maintain the national and state highway infrastructures.
Congress and the Mississippi Legislature face the same problems in raising highways funds from fuel taxes at current rates. Fuel consumption is flat-to-declining and fuel efficiency continues to improve, so as we drive less and get more miles to the gallon, the federal and state gas taxes don’t raise enough revenue to sustain the current transportation infrastructure or to expand and improve it.
After floating the VMT tax trial balloon a week earlier, Buttigieg then said that the Biden infrastructure plan would include neither higher federal gas taxes nor the VMT tax.
One key factor for rural Americans is the lack of public transportation as an alternative to driving. Massachusetts, with 6.89 million people, has a statewide public transportation system. Per capita VMT in Massachusetts in 2017 was 9,130. In New York state, with 8.4 million people, there are over 100 public transit systems. Per capita VMT in New York state was 6,316 in 2017.
Mississippi, with just over 3 million people, has an extremely limited public transit system that is primarily a bus system that benefits senior citizens, those with disabilities, students, employees, and those with few mobility options. Per capita VMT in Mississippi was 13,673 in 2017.
Sid Salter is a syndicated columnist. Contact him at sidsalter@sidsalter.com.