New Automotive Infrastructure Will Not Require Tax Increases

One of the main topics on the floor of Congress this week is how to improve the automotive infrastructure of the country.

Currently, the President has proposed a plan that would cost between $3 and $4 trillion, which sounds like it should require tax increases to pay for it. Although there are a couple of taxes that could be used, the conversation has thus far, been about avoiding the use of such taxes.

The Taxes that Could be Used

To improve the infrastructure of transportation around the country, a pair of taxes could be put in place to pay for some or most of the costs. An increase in the Federal Gas Tax is one possibility while a New Vehicle Miles Traveled Fee could also be used to cover the costs. As of right now, these two taxes are not being considered.

The Gas Tax Hasn’t Gone Up in a Long Time

The current Federal Gasoline Tax sits at 18.4-cents-per-gallon and it has been that way since 1993. That’s how long it’s been since Congress boosted the tax that used to be used specifically for funding automotive infrastructure repairs and expansion. As of now, the President is not planning to increase the gas tax because of his promise that Americans who earn $400,000 or less per year would not receive a tax increase during his term.

Should a Vehicle Miles Travelled (VMT) Fee be used for the Automotive Infrastructure Needs

Some elected officials think the VMT fee makes sense to collect the necessary money to repair roads and improve the infrastructure. They mostly feel this fee should be added to electric vehicles which currently do not have to pay the Federal Gasoline Tax because they don’t operate on gasoline. One issue with this could be the small number of EV models on the road right now. Adding this fee to the mix just might make consumers turn away from buying an EV when they’re shopping for a vehicle.

We’re Operating at a Standstill Right Now

Congress has transferred money to the Highway Trust Fund, including $13.6 billion in this fiscal year and more than $154 billion since 2008. Unfortunately, Congress did not approve a multi-year surface transportation bill last year and passed a one-year extension on the current bill. That extension ends at the end of the fiscal year, which is September 30.

A Plan Coming from the President

White House spokeswoman Jen Psaki has stated, “The President has a plan to fix the infrastructure of our country and he has a plan to pay for it” which gives us the idea that a plan is coming from the White House that might give Congress some comfort and offer a direction that doesn’t require taxing all Americans for driving their cars.

Check back next week and see if we have a conversation about the plan that is proposed by the President or if we’re still left in the dark as to this plan to repair the automotive infrastructure of the country.