Who Should Pay For Road Fixes?
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It isn't unusual for the Republicans and Democrats to be arguing over, well, just about anything. With current debates in Congress about infrastructure, road repair and taxes are at the forefront. The big question isn’t whether we need road work done, but who is going to pay for it?
The two parties seem to have done a switcheroo in their stances on the subject. At Jerry, we are keeping an eye on the infrastructure question and how it relates to our customers and their insurance needs and expenses.
Taxation on miles driven, fuel purchased, or corporations?
In the latest scenario, it is Republicans who are wanting to place higher levies on motorists, despite their customary no more taxes stance. And some Dems, who formerly were in favor of a vehicle mileage tax (VMT) rather than a fuel-at-pump fee, now want corporate taxes to pay for infrastructure as part of an economic stimulus plan, according to Autoblog.
The mileage fee has become a popular talking point as of late. Currently, the federal gas tax is set at 18.4 cents per gallon. It is included in the gas price you pay at the pump. The last national gas tax increase was made in 1993, raising it 14 cents per gallon. The raise was tied to a federal deficit-reduction effort, according to former U.S. Transportation Secretary Rodney Slater, and passed without any Republican support.
Some discussion has been made for indexing the tax to catch up with inflation. But another proposal is being looked at—the VMT. If a VMT were implemented, motorists would pay a road user charge based on the miles they travel on U.S. roadways. Illinois is currently working toward implementing its statewide VMT, and other states are considering it.
While initially, the Biden administration said they would look at a federal VMT, the president is not a fan as it conflicts with his vow to not raise middle class taxes. "It's long past time the wealthy and corporations pay their fair share." he shared in a tweet.
What about a truck tax?
Okay, Biden doesn't want to raise taxes on the middle class and Republicans don't want to raise taxes on corporations to repair roadways. What's next? Senator John Cornyn, a Republican from Texas, has suggested a 25-cent tax for every mile driven by heavy trucks. The idea, he said, could equivocate to about as much as the fuel tax.
Truckers would have none of that. "We're not opposed to VMT," said Bill Sullivan, executive vice president for advocacy at the American Trucking Association. "What we're violently opposed to is the idea of 'Let's just do this for trucks.'"
How about an EV tax?
The lack of roadway funds seems to stem from the broader use of electric vehicles (EVs), as they don't go to the pump or pay the tax billed there. The idea of a formula to assess EVs like the fuel tax was a suggestion made by Missouri Congressman Sam Graves, the top Republican on the House Transportation and Infrastructure Committee.
According to the Federal Highway Administration, the federal gas tax brought in $36.4 billion from the 2016 fiscal year, yet transportation spending exceeds $50 billion per year. Supporters of Graves' suggestion feel an EV tax could aid in closing the gap for federal highway funding.
Oregon Senator Ron Wyden, a Democrat and chair of the Senate Finance Committee, is opposed. "The suggestion is, middle class workers are going to pay what mega-corporations will not," he said during a May funding infrastructure panel hearing. "That's not a step toward fairness."
Where the discussion and subsequent legislation will go in funding for infrastructure and roadwork desperately needed is anybody's guess.
"We tried to go for a VMT provision," Slater said. "We recognized we couldn't solely rely on the gas tax to fund transportation. We were beginning to explore innovative financing techniques." That was 28 years ago.