Vehicle mileage tax could be on the table in infrastructure talks, Buttigieg says

A vehicle mileage tax could be on the table in talks about how to finance the White House’s expected multi-trillion-dollar infrastructure proposal, according to Transportation Secretary Pete Buttigieg.

Buttigieg, who spoke with CNBC’s Kayla Tausche on Friday, also contended that President Joe Biden’s forthcoming plans to rebuild the nation’s roads, bridges and waterways would lead to a net gain for the U.S. taxpayer and not a net outlay.

“When you think about infrastructure, it’s a classic example of the kind of investment that has a return on that investment,” he said. “That’s one of many reasons why we think this is so important. This is a jobs vision as much as it is an infrastructure vision, a climate vision and more.”

He also weighed in on several potential revenue-generating options to fund the project. He spoke fondly of a mileage levy, which would tax travelers based on the distance of the journey instead of on how much gasoline they consume.

“A so-called vehicle-miles-traveled tax or mileage tax, whatever you want to call it, could be a way to do it,” he said.

Democrats have slowly pivoted away from a gasoline tax in favor of a mileage tax amid a simultaneous, climate friendly effort to encourage consumers to drive electric cars.

“I’m hearing a lot of appetite to make sure that there are sustainable funding streams,” the Transportation secretary said. A mileage tax “shows a lot of promise if we believe in that so-called user-pays principle: The idea that part of how we pay for roads is you pay based on how much you drive.”

He added: “You’re hearing a lot of ‘maybe’ here because all of these things need to be balanced and could be part of the mix.”

The Transportation secretary’s comments came as President Joe Biden prepares to detail during a trip to Pittsburgh next week sweeping infrastructure proposals that could cost $3 trillion to $4 trillion.

In the first news conference of his presidency, Biden on Thursday said that rebuilding U.S. physical and technological infrastructure was his next priority, critical not only to efforts to restore the economy, but also to remain competitive with rivals like China.

Buttigieg added Friday that the White House is considering a revival of Build America Bonds, a special class of municipals bonds first introduced in the Obama administration with interest costs financed by the U.S. Treasury.

BABs show “a lot of promise in terms of the way that we leverage that kind of financing. There have been ideas around things like a national infrastructure bank, too.”

His remarks on Friday came a day after he implored Congress on Thursday to make a “generational investment” to improve the nation’s roads, bridges and waterways, and combat climate change and racial inequity.

“There is near-universal recognition that a broader recovery will require a national commitment to fix and transform America’s infrastructure,” Buttigieg told the the House Transportation and Infrastructure Committee.