CBO Report: A 7.5 cents per mile traveled tax on commercial trucks would cover their share of the U.S. Highway Trust Fund shortage
By Patrick O’Connor, NAFA U.S. Legislative Counsel
Imposing a 7.5-cent tax for every mile a commercial truck travels would generate enough new revenue to replace the Highway Trust Fund taxes that truck owners now pay and also cover the industry’s share of the fund’s current shortfall, a Congressional Budget Office report found last week.
With the current surface transportation authorization set to expire at the end of September 2020, lawmakers are debating how to pay for funding gaps in the Highway Trust Fund. The report suggests that a tax on vehicle miles traveled would help fill that gap, though lawmakers would need to decide how to implement mile tracking and structure enforcement and collection.
An excerpt from the report: “Since 2001, spending from the Highway Trust Fund for highway and transit programs has consistently exceeded revenues from taxes on highway users. The Congressional Budget Office projects that without additional revenues or reductions in spending, the fund will be exhausted by 2022.”
This report examines one option for reducing the trust fund’s imbalances: a tax on vehicle miles traveled (VMT) by commercial trucks. Kentucky, New Mexico, New York, and Oregon already levy such taxes at the state level. To implement a federal tax, lawmakers would need to determine:
• The tax base—which trucks would be taxed and on which roads the tax would apply;
• The rate structure—whether the tax would be uniformly applied to all trucks or would vary by trucks’ configuration, weight, or location; and
• Implementation methods—whether to assess taxes using odometer readings, radio-frequency identification readers (like those in use on many toll roads), or onboard devices such as electronic logging devices.
The CBO estimates that in 2017, a tax of 1 cent per mile on all roads would have raised about $2.6 billion for the trust fund, if imposed on all commercial trucks, and about $1.6 billion if imposed only on those with one or more trailers. Revenues would have increased almost proportionally for higher tax rates.
The costs to the government of implementing a VMT tax on trucks are uncertain but would be higher than the costs of the existing tax on diesel fuel. The distributional effects of a VMT tax would be essentially the same as those of the diesel tax, however.
The report advises that policymakers would need to specify the set of vehicles subject to the tax. The CBO considered the following illustrative possibilities:
• The set of vehicles subject to the tax could be all commercial trucks, defined as vehicles with six or more tires or a gross vehicle weight rating of at least 10,000 pounds, or only combination trucks.
• The set of roads on which travel would be taxed could be all public roads, Interstate highways and arterial roads (as classified by the Federal Highway Administration, or FHWA), or Interstate highways only.