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Pete Buttigieg vehicle miles tax: how would it work?

The White House has announced a possible tax on drivers' mileage to help fund President Joe Biden's proposed $3 trillion US infrastructure plan.

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Pete Buttigieg vehicle miles tax: how would it work?
OLIVIER DOULIERY AFP

The White House is mulling a vehicle miles tax (VMT) to fund President Joe Biden's $3 trillion infrastructure plan, Transport Secretary Pete Buttigieg has announced. The idea of the VMT would be to tax motorists per mile driven as an alternative to further hiking the gas tax.

Buttigieg: "We're going to be using less and less gas"

I think that shows a lot of promise," Buttigieg said when floating the idea of the VMT during an interview with CNBC. "If we believe in that so-called user-pays principle. The idea that part of the way 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 VMT has been mooted by a Biden administration facing increasing pressure to find alternative ways to finance infrastructure projects, a political hot potato that has been juggled ineffectively by previous White House incumbents.

Levies on gasoline and diesel sales traditionally fund road and public transportation improvements in the United States, but if more drivers opt for electric vehicles, that revenue stream will be less reliable, Buttigieg explained. “We're going to be using less and less gas.”

Biden to unveil $3 trillion infrastructure plan next week

President Biden is due to unveil his infrastructure plan next week in Pittsburgh and senior Democrats are confident it will not face much opposition on the floors of Congress. White House press secretary Jen Psaki and Biden both noted that Republicans traditionally have broadly supported infrastructure investment in the USA.

“The next major initiative is both physical and technological infrastructure in this country - so that we can compete and create significant numbers of really good-paying jobs. Really good-paying jobs,” Biden told a White House media briefing. “And some of you have been around long enough to know that used to be a great Republican goal and initiative. I still think the majority of the American people don’t like the fact that we are now ranked, what, 85th in the world in infrastructure. I mean, look, the future rests on whether or not we have the best airports that are going to accommodate air travel, ports that you can get in and out of quickly, so businesses decide.”

Among the items on the infrastructure bill’s agenda are road and bridge repairs, ensuring access to drinking water and upgrading building structures in schools. Biden noted that 231,000 bridges and one in every five miles of US highways, 186,000 miles in total, are in need of repair.

Treasury Secretary Janet Yellen said earlier this week that Biden is also considering raising corporate tax from 21 percent to 28 percent but that negotiations on this front would be held in conjunction with the OECD to try and impose a global minimum rate.

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