US transport secretary says mulling mileage tax for…
Pete Buttigieg says the Biden administration is considering taxing drivers by the MILE to fund their £3trillion climate-friendly infrastructure proposal
- Biden’s Transportation Secretary said the idea of taxing miles driven ‘shows a lot of promise’
- Federal gasoline taxes have failed to keep up with the demand for infrastructure projects
- Mileage tax could get at drivers of electric vehicles that are proliferating
- Joe Biden rolls out his infrastructure plan on Wednesday in Pittsburgh
Published: 16:53, 26 March 2021 | Updated: 21:37, 26 March 2021
The White House is mulling a tax on vehicles’ mileage to pay for a proposal to revamp the nation’s infrastructure expected in the coming days, Transportation Secretary Pete Buttigieg said on Friday.
In an interview with CNBC, Buttigieg said a tax on miles driven ‘shows a lot of promise,’ as President Joe Biden’s administration faces pressure to find ways to fund infrastructure improvements, a goal that has eluded the past two presidential administrations.
‘The gas tax used to be the obvious way to do it. It’s not anymore, so a so-called vehicle miles traveled tax or mileage tax, whatever you want to call, could be a way to do it.’
The nation has traditionally paid for road improvements with its gas tax, but Transportation Secretary Pete Buttigieg said that may no longer be enough as more and more people use electric cars
He floated the idea days before President Biden is set to head to Pittsburgh to make a pitch for a £3 trillion infrastructure plan, with proposals to fix roads and bridges while also funding ‘social infrastructure’ to fund for pre-K programs and childcare.
The tax on miles is a way to get around shortages in the nation’s highway trust fund, which gets funded by taxes on gasoline.
The form of user fee doesn’t adequately get at the increase of electric vehicles.
Levies on gasoline and diesel sales pay for improvements to roads and mass transit in the United States, but if more drivers shift towards electric vehicles that revenue stream will become less reliable, Buttigieg said.
President Joe Biden is preparing to roll out a major infrastructure plan
A mileage tax would get at electric car drivers who still produce wear and tear on roads
A crack across the roadway is seen as Nevada Department of Transportation worker Jarrid Summerfelt repairs damage to U.S.
Highway 95 after a strong earthquake struck near Tonopah, Nevada, U.S., May 15, 2020
‘We know that it can’t be the answer forever, because we’re going to be using less and less gas. We’re trying to electrify the vehicle fleet,’ the secretary said.
‘So, if there’s a way to do it that doesn’t increase the burden on the middle class, we can look at it, but if we do, we got to recognize that’s still not going to be the long term answer.’
He left himself room to back away should the proposal falter. Past administrations have seen new efforts to tax energy fall by the wayside, including Bill Clinton’s efforts to push for taxing British Thermal Units, or BTUs.
‘A so-called vehicle-miles-traveled tax or mileage tax, whatever you want to call it, could be a way to do it,’ he said.
The idea ‘shows a lot of promise if we believe in that so-called user-pays principle: The idea that part of how we pay for roads is you pay based on how much you drive,’ he said.
One idea floated to pay for transportation and other physical infrastructure programs is an increase in the corporate tax rate.
Republicans are likely to line up against any tax increases.
The president is set to unveil his proposal on Wednesday in Pittsburgh.
The infrastructure measures are aimed at fixing roads, bridges and airports that are decades old and in need of repair, as well as expanding education and paid leave.
Treasury Secretary Janet Yellen said this week Biden could propose hiking corporate taxes to 28 percent, but would prefer doing that as part of an agreement with other Organization for Economic Co-operation and Development countries on a global minimum tax.
The spending would come after Biden won passage of the £1.9 trillion American Rescue Plan this month, which is the third major relief bill passed by Congress to help consumers and businesses after the Covid-19 pandemic caused a massive economic downturn.
Those outlays pushed up the US debt and budget deficit to record levels in 2020, upping pressure from Congress for Biden to find ways to pay for his future spending proposals.
On Thursday, Buttigieg in congressional testimony called for a ‘general investment’ in infrastructure.
‘I believe that we have at this moment the best chance in any of our lifetimes to make a generational investment in infrastructure that will help us meet the country’s most pressing challenges today, and create a stronger future for decades to come,’ he said.
‘Across the country, we face a trillion-dollar backlog of needed repairs and improvements, with hundreds of billions of dollars in good projects already in the pipeline,’ he added. ‘We face an imperative to create resilient infrastructure and confront inequities that have devastated communities.’
Sam Graves (R-Kans.), the top Republican on the Transportation and Infrastructure Committee, hit back against the Biden team’s plans for major environmental programs.
‘The transportation bill, I think, needs to be a transportation bill, not a Green New Deal,’ he said, the New York Times reported. ‘It needs to be about roads and bridges, and I hope that as this committee works on our next major bill, that we remember to prioritize transportation infrastructure.’
In his CNBC interview, he also talked up ‘Build America Bonds,’ used during the Obama administration, as something showing ‘a lot of promise in terms of the way that we leverage that kind of financing.’
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