California officials have been toying with the idea of a Vehicle Mileage Traveled Tax (VMT) for some time but due to Governor Newsom’s executive order that only zero-emission cars must be sold starting in 2035 you can bet that the VMT will become a reality.
If Californians switch to electric vehicles under the executive order, the gas tax and other taxes such as the sales tax on gasoline purchases will disappear. One estimate says the gas tax brings in $8 billion a year. The excise tax on gasoline was recently raised to the highest in the nation under the rationale that money was needed for road improvements. Vehicles, electric and otherwise, will still be on the road with the executive order implemented but the revenue to build and fix the roads to meet the demand of road maintenance because of all those cars will be reduced dramatically to relatively nothing.
So where does the money for road maintenance come from? Hello Vehicle Mileage Tax.
The VMT idea has been swirling around for years, becoming more prominent with the advance of electric vehicle technology. Electric vehicles add to road wear and tear but do not contribute to the road maintenance funds through the gas tax. An issue of fairness has driven consideration of a VMT.
In fact, the California State Transportation Agency has already run trials on alternative road charges. The trial consisted of 5,000 volunteers from around the state using different vehicle types testing recording and payment simulation methods for miles traveled.
The recording of miles driven has been a constant obstacle in switching to a VMT model.
Will the state know not only how many miles a user drove, but where a driver traveled? Location tracking systems can track such information. Just think about GPS systems used by drivers today.
The Transportation Agency’s trial reported that three-quarters of the volunteer drivers were satisfied with the security of their data.
But the volunteer group may not be the best sample to test this controversial feature of tracking miles driven. There will be concerns and protests raised about data collection.
The governor asked state bureaucracies to come up with methods to make his executive order work. Legislation will soon follow from cooperating majority Democrats to implement the idea. Don’t be surprised if a Vehicle Mileage Tax plan is included in the legislative package, although it may be a bit premature.
We recently battled over whether the gas tax increase should be repealed. The fight cost one senator his seat in a recall but an initiative to upend the gas tax increase was defeated.
Get ready for more battles to come not only over the goal of Newsom’s executive order but over how roads will be funded if the order is successfully implemented.