As the future of American transportation evolves, new methods are being considered to fund infrastructure projects. Traditionally, the Highway Trust Fund has been supported through a gas tax. However, with the rising popularity of electric vehicles (EVs) and reduced gasoline consumption, alternative revenue sources are being explored. In an interview with Transportation Secretary Pete Buttigieg, he acknowledged that the gas tax is outdated, particularly as the country shifts toward electrification. With President Joe Biden’s push to invest $174 billion in electric vehicles, a new funding approach is becoming increasingly necessary.
The Proposed Shift: Vehicle-Miles-Traveled Tax
To address the diminishing funds from gas taxes, Buttigieg suggested the possibility of a vehicle-miles-traveled (VMT) tax. This would involve charging individuals based on how many miles they drive, aligning with the “user-pays” principle where road users contribute to the maintenance and development of transportation infrastructure. A VMT tax could replace the gas tax and ensure sustainable funding for infrastructure as electric vehicles become more prevalent. Buttigieg expressed optimism about the potential of this system, though its implementation presents challenges.
The National Surface Transportation Infrastructure Financing Commission, in 2009, recommended a VMT tax as a long-term solution to transportation funding. According to their report, a tax based on miles driven—rather than fuel consumption—would be more efficient and sustainable. The commission argued that such a system could be implemented without compromising the effectiveness of federal transportation investments, emphasizing that it could also take factors like road type and vehicle weight into account. This proposal marks a shift in how the government could finance transportation projects in the future.
Privacy Concerns and the Need for Safeguards
A major hurdle in the VMT system is the concern over privacy. To effectively track how many miles a person drives, a system would need to monitor vehicle movements, which could be perceived as an invasion of privacy. The 2009 report acknowledged this issue and proposed that vehicle tracking be handled in a way that protects personal privacy. One suggestion was for tracking data to be stored within the vehicle itself, ensuring that only the car’s GPS system would know the travel details. This would eliminate the need for external surveillance while still calculating mileage for tax purposes.
For the VMT tax to be effective, the public would need to trust the government or an appointed entity to manage the data securely. The commission’s proposal suggested that a GPS-based system could be implemented with safeguards to protect privacy. Additionally, to simplify the process, employers could be required to withhold the VMT tax from employees’ paychecks, similar to how payroll taxes are currently handled. This system would allow the government to efficiently collect taxes while minimizing the concerns of Americans about privacy and government overreach.