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AskWavesNewsTop StoriesTrucking Regulation

Can taxing trucks on miles traveled work?

AskWaves looks at possible federal vehicle-miles-traveled tax and the outlook for rolling it out

A user fee to raise money for roads and bridges that is based on the number of miles a truck travels is popular among policymakers but does not sit well with industry lobbyists.

Working the details

Unlike taxes on gasoline or diesel, a fee based on vehicle miles traveled (VMT) “gets much closer to capturing the externalities and to approximating the road maintenance cost of each driver,” according to the Tax Foundation, an independent tax organization that has opposed increasing traditional taxes, such as fuel taxes.

Four states — Kentucky, New Mexico, New York and Oregon — are already levying a commercial truck VMT fee. At the federal level, a VMT tax on trucks could also be a substitute for existing taxes on trucks that are credited to the Highway Trust Fund (HTF), the main source of money for maintaining roads and bridges.

In a 2019 study, the Congressional Budget Office (CBO) pointed to three areas that would have to be addressed by lawmakers before a federal VMT tax on trucks could be rolled out:

  • Tax base: Which trucks would be taxed and on which roads the tax would apply.
  • Rate structure: Whether the tax would be uniformly applied to all trucks or vary by trucks’ configuration, weight or location.
  • Implementation: Whether to assess taxes using odometer readings, radio-frequency identification readers (like those used on toll roads) or electronic logging devices (ELDs).

Cost factor

Of the four states with truck VMT taxes, Kentucky charges a flat rate of about 3 cents per mile, and the other three charge rates that vary by trucks’ weight, ranging from about 1 to 29 cents per mile, according to CBO.

Because most trucking companies already track their vehicles, the Reason Foundation, a libertarian think tank, argues that implementing a VMT tax on only commercial trucks would require overcoming fewer administrative and privacy hurdles than implementing such a tax on all vehicles.

However, putting a federal VMT fee in place “would impose greater costs on the federal government and trucking companies than increasing existing taxes,” CBO pointed out in its study.

A study published earlier this year by the American Transportation Research Institute (ATRI) put a price tag on those costs: upwards of $20 billion.

Industry pushback

The trucking industry’s most powerful lobbying group, the American Trucking Associations (ATA), which favors raising fuel taxes to strengthen the HTF, has long been wary of a federal VMT tax — particularly one that would apply only to trucks.

Testifying at a Senate hearing on Tuesday, ATA President and CEO Chris Spear warned not only of the high costs, but of problems with tracking the tax through an ELD. “Federal regulatory requirements for these devices were designed to ensure an accurate record of hours driven, not the number of miles driven,” Spear said. “Nor do the requirements provide an ability to broadcast data to taxing authorities. Furthermore, most commercial vehicles — 72% — are not required to be equipped with recorders.”

Spear also pointed out that even strong supporters of a VMT tax acknowledge that full implementation is still a decade away. “Failure to provide interim funding for urgent surface transportation needs while these solutions are developed would be highly irresponsible.”

A fan in ‘Secretary Pete’?

Despite its proposal to raise taxes to pay for infrastructure, the Biden administration has publicly been open to user fees as well.

When U.S. Rep. Doug LaMalfa, R-California, who represents a rural district in the northern part of the state, raised concerns in March at a congressional hearing that a VMT tax could disproportionately harm small truckers in his district, Secretary of Transportation Pete Buttigieg acknowledged the problem — but did not dismiss the possibility of a VMT fee.

“What’s really driving this is the awareness that as vehicles become more fuel-efficient — or move off gasoline entirely — we need to make sure that if we’re on a user fee system that they’re somehow paying in,” Buttigieg testified.

“The gas tax was the simplest way to have a user fee because we used to know for a fact that the more you drove, the more gas you’d use. Now it’s not that simple. There are a lot of ways we can think about setting up [a VMT], whether it’s a rebate mechanism or a phase-in approach so that it’s not disproportionately hurting those who are already hard-hit.”

Click for more FreightWaves articles by John Gallagher.

John Gallagher, Washington Correspondent

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.

2 Comments

  1. Rolling Rock Beer Latrobe Pennsylvania uses CH Robinson for shipping loads. Once you squeeze down the road along the building it’s like a truck stop in the back maybe 50 dock doors and 4 rows of parking . Then keep Bugging the office window with your pick up number incase there’s a shift change.

  2. Very good idea charge a $100 per year for the plate plus the milage tax based on the permit weight. All 3 axle 48 foot trailers and a front 32 foot trailer with a back 28; foot trailer charge extra for any tractors that haul over a 48 foot trailer or over 80,000 lbs gross. With electric assist delivery trucks we need another income source to pay for roads and parking with bathroom and driver lounge and electric plugs.

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