Move over gas tax, here’s the new fee that could hit drivers

By TaxesFOXBusiness

Republicans weigh risks of supporting gas tax hike

U.S. Concrete CEO Bill Sandbrook explains why Republicans shouldn’t be afraid to support a gas tax hike that would likely go toward funding President Trump’s infrastructure plan ahead of the 2018 midterm elections.

The White House hinted on Wednesday that it may favor a new tax on mileage rather than raising the federal fuel tax as means to help fund its massive $1.5 trillion infrastructure plan.

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The Council of Economic Advisers released its annual economic report on Wednesday, highlighting “the declining revenue productivity of existing gasoline taxes” and instead detailing an alternative user fee on vehicle miles travelled.

A vehicle miles traveled tax, or VMT, would impose charges based on the amount of miles driven on state roads.

“Assessing a charge based on mileage instead of gasoline consumed would link consumers’ choices more closely to the costs they impose, including congestion, emission, pavement damage, and so on,” the report read.

The state of Oregon has a VMT pilot program, charging volunteer participants a fee of 1.7 cents per mile and providing them with credits for state fuel taxes paid. Other states, including New Hampshire, Pennsylvania and Connecticut, have all sought federal support to investigate how a VMT tax might work in their states, according to The Brookings Institute.

"The VMT is getting more interest because fuel efficiency is rising, which is limiting the government revenue haul from gas taxes," Chris Edwards, director of tax policy studies at Cato and editor of www.DownsizingGovernment.org, told FOX Business. "But motorists should demand that gas taxes are abolished if new VMT charges are put in place so that the government doesn’t double-tax them. Also, motorists should demand that VMT systems raise funds in the least intrusive and anonymous way with no databases retained by the government."

According to Sen. Tom Carper (D-Del.), President Trump voiced support for a one-time, 25-cent hike in the federal fuel tax during a meeting at the White House last week, as a way to help raise funds for the infrastructure revamp. Some states, like Wyoming and Mississippi, would see costs per family rise substantially under that proposal.

The White House has not confirmed that the president supports the measure, saying instead that all options are on the table.