VMT MEANING HOW TO
VMT MEANING DRIVERS

This is no new idea it simply represents a return to tradition. Ideally, funding should come from the beneficiaries of the system, which is another way of saying that the people who drive on the roads should fund the roads. According to Congressional Budget Office (CBO) estimates, the Highway Trust Fund will run out of money by the end of 2021 and the deficit is projected to be almost $70 billion over the first years after the FAST Act funding expires. Revenue from the federal motor fuel tax will not fund projected spending at the current tax rate, so the only options for lawmakers are to either appropriate general fund money or increase taxes.

VMT MEANING HOW TO

With the current funding program, the Fixing America’s Surface Transportation Act (FAST Act), expiring this year, Congress must decide how to pay for the Highway Trust Fund in the years to come. While 36 states have increased motor fuel tax rates over the last decade, the federal government has not updated the gas tax since 1993. There has been strong political debate over funding for America’s highways, and it is likely to continue. Today, a combination of increased fuel economy, growth in sales of electric vehicles (EVs), and inflation has raised questions about the sustainability of these taxes as a funding mechanism for the transportation system of the future. States have levied these taxes since 1919, and by 1932, when the federal tax was introduced, the then-48 states and the District of Columbia were collecting taxes on motor fuel. The actual rate per vehicle should be differentiated based on weight per axle.Īmerica’s highways are largely funded by state, local, and federal motor fuel taxes.

A federal VMT tax rate must average 1.7 cents per mile to cover the highway fund’s expenditures.

Rather than using taxes on cars or motor fuel as a proxy for transportation, a tax levied directly on miles gets closer to capturing the externalities and approximating the road maintenance cost of each vehicle.

One solution is to fund highways by taxing vehicle miles traveled.

Discrepancies between tax revenues and highway expenditures will get worse as fuel economy improves, if tax rates are not indexed to inflation, or if share of electric vehicles (EVs) grows.

VMT MEANING DRIVERS

In 2018, a passenger car averaged 24.4 MPG and drivers only paid 2.1 cents per VMT. In 1994, a passenger car averaged 20.7 miles per gallon (MPG) and drivers paid 3.2 cents in state and federal tax per VMT. Tax revenues per vehicle mile traveled (VMT) are decreasing in real terms while expenditures are increasing in real terms.The tax also aims to counter the negative side effects caused by driving petroleum-burning motor vehicles and their contribution to congestion. The motor fuel tax is a relatively well-designed tax which acts as a user fee by raising revenue to fund the highway system.

While many states have increased motor fuel tax rates over the last decade, the federal government has not updated the gas tax since 1993. The future of funding for America’s highways has been the topic of much political discussion for decades.

Vmt meaning