Even before criticism of the Biden Infrastructure legislation for its redefinition of infrastructure to include the electrical grid, water pipelines and internet access among other things, the question of how to pay for infrastructure improvements was a persistent point of contention.
Secretary of Transportation Pete Buttigieg has proposed a VMT tax, which has been tested in recent years by a number of individual and regional groups of states. But the American Transportation Research Institute (ATRI) has found that approach too costly.
In recent years a number of individual and regional groups of states have tested the idea of a VMT tax, but a recent study by the American Transportation Research Institute finds that approach too costly.
Replacing the federal fuel tax with a VMT tax that is assessed on 272 million private vehicles could result in collection costs of more than $20 billion annually – or 300 times higher than the federal fuel tax, according to the researchers.
The central reason for this large increase in costs is the shift in collection points – from a couple hundred fuel terminal operators to every registered motor vehicle in the United States.
Hardware costs alone are said to bear an initial price tag of $13.6 billion and would require ongoing replacement, telecommunications costs of approximately $13 billion annually. Add to that account administration, which would require an additional $4.3 billion to be budgeted each year.
On top of these costs, credit card transactions for electronic payment and even the shipping costs for the hardware could each cost more than $1 billion.
American Trucking Associations President Chris Spear, who is an ATRI board member, said, “Most experts agree that some sort of VMT system is a part of that future, and ATRI’s report makes clear that implementing it will take thoughtful leadership, cooperation from stakeholders and a strong plan to transition away from current funding streams.”