The American Transportation Research Institute (ATRI) released a new report detailing the costs of deploying and operating a national vehicle miles traveled (VMT) tax. The primary source of federal funding used by state governments to maintain and improve US surface transportation infrastructure is the Highway Trust Fund. However, various factors such as the fact that the rate has not been adjusted for inflation, an increase in fuel efficient vehicles, as well as electric vehicles, the Highway Trust Fund faces annual shortages. Many elected officials and advocacy groups are seeking new funding mechanisms with the VMT gaining traction.
With a goal of understanding the opportunities and challenges of a federal system, the research first explored the technical and administrative requirements of charging every US driver for miles driven. Next, the costs of operating a VMT tax program were calculated, including those associated with technology, data communications and account management.
It was found that replacing the federal fuel tax with a VMT tax that is assessed on 272 million private vehicles could result in collection costs of more than $20 billion annually, or 300 times higher than the federal fuel tax. The central reason for this large increase in costs is the shift in collection points, from a couple hundred fuel terminal operators to every registered motor vehicle in the US.
Also, the report found that hardware costs alone would have an initial price tag of $13.6 billion and require ongoing replacement, telecommunications costs would be approximately $13 billion annually, and account administration would be an additional $4.3 billion each year. On top of these costs, credit card transactions for electronic payment and even the shipping costs for the hardware could each cost more than $1 billion.
The full ATRI report is available here.