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While the governor of the Constitution State has not yet signed the bill into law as of the writing of this article, Ned Lamont has already expressed his support for a miles tax on heavy trucks traveling within Connecticut’s borders. It is probably best to brace for impact.
Details of the Bill
Anyone who has driven on the road in the last dozen years knows the United States has what is nothing short of an infrastructure crisis. Tired of waiting for the federal government to help resolve the issue, Connecticut is taking matters into its own hands.
Assuming it is signed into law, which it probably will, and it withstands impending civil suits, which it may or may not, it will take effect in January 2023. Carriers will have to determine the number of miles traveled within state borders and pay a monthly tax based on that amount, in a manner similar to IFTA. The rate per mile will depend on the weight of the vehicle, ranging from 2.5 cents per mile at 26,000-28,000 pounds, to 10 cents a mile at 78,000-80,000 pounds, to 17.5 cents each mile for 80,001 pounds and above. There is a carved-out exemption for dairy hauling.
While over 30 states have their own fuel taxes levied to generate revenue, the federal fuel tax rate has not been increased since 1993. Federal diesel tax is currently at $.244 per gallon, less than a quarter. Assuming a truck gets 6 miles to the gallon, that is a tax of about 4 cents per mile; this is larger than the lowest Vehicle Miles Traveled (VMT) tax in Connecticut, but a fraction for the typical big rig.
The biggest argument for an increase in fuel tax over any VMT tax is the administrative burden of collections. Fuel taxes cost about 1% to collect, meaning that every one million dollars spent yields $990,000 to improve our highways.
While a VMT tax has not been implemented fully yet, experts estimate costs to be about 40%, an extra $390,000 gone in smoke.
Fuel tax increases are not popular, but they are necessary considering the alternative of taxing vehicles for miles traveled is both more expensive and less efficient. Some would argue that electric vehicles would get free reign to use the roads without paying for their use, but a similar kilowatt-hour tax could be implemented at electric charging stations in a manner that would have equal or even less administrative costs than a diesel fuel tax.
We hope this VMT tax is struck down in court, otherwise Connecticut is going to see a lot fewer goods shipped within its borders.
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