The Vermont Senate is considering a proposal that would apply a mileage based user fee (MBUF), essentially, a tax on miles driven, to all passenger vehicles in the state by the early 2030s.

The MBUF is set at an initial rate of 1.4 cents per mile and would increase annually under an inflation adjustment.

An MBUF is sometimes viewed as a more viable alternative to gas and diesel taxes, which are experiencing revenue declines due to improved fuel efficiency and mild growth in electric vehicles.

Declining gas tax revenue means less money to maintain Vermont’s roads and bridges.

What’s up with the MBUF? As currently written, a proposal in the Vermont Senate would impose an MBUF with no change to the state gas tax. Eventually, all drivers of passenger cars and trucks would pay both.

If the MBUF replaced the gas tax, it likely would result in a modest net change for most drivers.

However, an MBUF plus gas tax means the average driver would pay about $180 more per year. Rural drivers would generally pay much more.

While there may be a case for replacing the gas tax with an MBUF, lawmakers would need to ensure it does not create inequities for small business owners, rural drivers, and workers – especially as commuting costs can have a significant impact on a person’s willingness to work.

With the state already facing an affordability crisis for families and small businesses, adding an MBUF on top of the state gas tax is counterproductive.

NFIB Vermont raised these concerns in a letter to the Senate Transportation Committee: NFIB VT Letter re H.944 (Mileage Based User Fee).

Why is MBUF on the table at all? Most states are experiencing the same road and bridge funding problem but many are loath to increase fuel taxes to replace the declining revenue. A handful of states have turned to MBUFs, but generally as an alternative to the gas tax – not in addition to it.

Moreover, electric vehicles generate the same (or more) wear and tear on roads as internal combustion vehicles but do not contribute to the upkeep via the gas tax. Vermont’s MBUF was originally conceived as a means of ensuring EVs pay their fair share for road maintenance.

What else can we do about the roads? To cover the shortfall in transportation funding, Governor Scott and some lawmakers have proposed gradually shifting revenue from the vehicle sales tax to from the Education Fund the Transportation Fund.

This would align the subject of the vehicle sales tax (vehicles) with the use (roads and bridges).

However, fearing having to backfill the Education Fund, the legislative majorities so far have taken a much more limited and short-term approach.