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Tuesday, May 17, 2022

U.S. President Joe Biden’s Build Back Better plan does not impose a new mileage tax

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Biden’s Build Back Better plan does not impose a new mileage tax. These rumors appear to be based on a misinterpretation of a section of the Infrastructure Investment and Jobs Act that is currently (as of October 1, 2021) making its way through Congress.

The infrastructure bill does not impose a mileage tax. Rather, this bill proposes a “national motor vehicle per-mile user fee” pilot program to study the impacts of a mileage tax. 

Since 2000, fuel tax revenues have declined significantly due to a confluence of factors. For one, people are driving less, and when they do drive, they’re more efficient than ever – fuel economy reached a record high in 2020 at 25.7 miles per gallon. The adoption of electric vehicles and other alternative fuel vehicles, which has been called for by Biden himself, has also limited use of the pumps. And because the gas tax hasn’t been sufficient to cover the costs of transportation infrastructure for at least the past decade, everyone is paying for our roads, even those who don’t drive on them.

For the Biden administration, the answer could be in a vehicle miles traveled (VMT) tax. The administration’s $1 trillion infrastructure package proposes allocating a total of $125 million over five years to test pilot programs for a road usage fee under which drivers are taxed by miles traveled. But while a VMT tax program might help the nation’s faltering transportation infrastructure, it could have some negative implications for other transportation industries.

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