0000012903 00000 n Table 2 is an example of how differentiation of rates could look based on mileage information from 2018. If the VMT tax would fund the transit account, as the gas tax has, expenditures would total $55 billion, and the rate would have to be 1.7 cents per mile. To address these concerns, any increase in the gas or VMT tax would be best offset by a tax cut of an equal dollar amount.[46]. This has the effect of reducing the value of a nations gas tax levy in American dollars, making reductions in gas taxes across the OECD look larger in magnitude than they were. One of the biggest threats against the levy is electric vehicles (EVs) as these cars do not contribute to the state highway funds or the federal highway funds. Road damage increases with weight of a vehicle but decreases based on the number of axles. DMV Fees Americas highways are largely funded by state, local, and federal motor fuel taxes. While 36 states have increased motor fuel tax rates over the last decade, the federal government has not updated the gas tax since 1993. While this is trueelectric vehicles generate less net carbon emissionsit does not account for the single largest function of the current motor fuel tax regime (funding roads) or the greatest externality associated with driving cars (wear-and-tear). Maximum Fine for Speeding Tickets in Virginia "Fuel-efficient vehicles" are defined as vehicles that have a combined fuel By layering an additional price to driving, the tax can encourage drivers to take road utilization into account when deciding where to live or how often to drive. Federal revenue is more volatile than state revenue, as there is a spike in revenue after each tax increase, followed by a decline. A vehicle-miles-traveled or mileage-based user fee approach ultimately makes a lot of sense, Stanford said. This year, I introduced a bill that Virginians arent forced to buy an electric vehicle, this entire idea of alternative tax for these individuals is just wrong, Newman said. Too many parameters would result in an increasingly complex tax design, which would make it less transparent. [8] Amir El-Sibaie, Electric Vehicles Will Have a Long-Term Impact on the Gas Tax, Tax Foundation, Feb. 12, 2018, https://taxfoundation.org/electric-vehicles-gas-tax/. 0000001484 00000 n Why are vehicles that are easier on the road (and environment) being footed with a bill to cover the costs of vehicles that cause more damage from daily use? One solution is to fund highways by taxing vehicle miles traveled. Source: U.S. Census Bureau; Federal Highway Administration; authors calculations. Since 2013, the American dollar hasappreciated in valuerelative to other currencies, including the currency of many OECD member countries,the Euro. At the same time, the sale of cars dropped from above 60 percent to under 45 percent. Federal gas tax collections in 2018 totaled $26.7 billion. This would guarantee that motor fuel tax rates would follow developments both in technology and in inflation and maintain cents raised per VMT. Toll Facilities States have an added complication regarding out-of-state drivers if no federal system exists. A VMT tax could be implemented by either levying a flat fee per VMT or developing an advanced tracking system with different rates for different locations. In 2012, the United States Supreme Court ruled that unwarranted GPS tracking of vehicles was unconstitutional. [48] Jim Parsons, Maryland Shortlists Four Teams for Planned $11B P3 Highway Project, Engineering News-Record, July 20, 2020, https://www.enr.com/articles/49743-maryland-shortlists-four-teams-for-planned-11b-p3-highway-project. 0000011748 00000 n
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