Transportation Secretary Pete Buttigieg proposed a vehicle mileage tax that would tax drivers based on the amount of miles driven per year.
“So I think that shows a lot of promise,” said Buttigieg during an appearance on CNBC . “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. The gas tax used to be the obvious way to do it. It’s not anymore.”
The tax would help pay for Biden’s multi-trillion dollar infrastructure plan.
As more drivers purchase electric vehicles, federal gas tax revenue will go down. Federal highway funds are experiencing a gap of close to $16 billion because fewer people are purchasing gas.
“People are talking about it more than have in the past, which is a good thing,” said Executive Director of the American Association of State Highway and Transportation Officials Jim Tymon to Bloomberg. “The vehicle fleet is trending toward electrification and the Biden Administration is going to prioritize this. That’s going to force their hands a little bit because you’re not going to be able to collect the same amount of revenue as you do from gas and diesel vehicles.”
The tax could come in two ways according to the Tax Foundation, a flat tax or a tax that would vary based on location. An odometer reading once a year would determine how much individuals would have to pay. Rates would vary based on weight.