A weight-distance tax is a tax on distance traveled by heavier vehicles, e. g. over 18,000 pounds. The taxpayer declares and registers the gross weights of his vehicles and keeps records only of mileages traveled, laden and unladen. This tax is not to be· confused with a ton-mile tax, which requires much more difficult records of ton-miles of travel. This report presents:

1. A weight-distance tax rate schedule, planned with the intention that the weight-distance tax might be enacted to replace the present gross receipts tax on freight carriers for hire and might be imposed also on owners of private and foreign freight-carrying vehicles using Virginia highways.

2. Estimates of the mileages of travel on Virginia highways which such a tax might reach and of the weight-distance tax yields.

3. An estimate of the cost of administering such a tax.

Distance travelled by heavier vehicles is a logical consideration in highway taxation, and the reasonable assumption in this study uses the $1,000,000 gross receipts tax now paid by Virginia carriers for hire as a measure of the extra tax against heavy vehicles which those carriers should continue to pay while road damage studies are continuing and of weight-distance rates equally appropriate for all heavy vehicles.

The report considers four weight-distance tax rate schedules, two taxing vehicles weighing more than 18,000 pounds and two taxing only vehicles weighing more than 24,000 but at higher rates, all four schedules approximating $1,000,000 yield from Virginia carriers for hire.

For the purpose of most equitably, or considerately, for all groups concerned, promptly replacing the gross receipts tax with a weight-distance tax, the report recommends the tax rate schedule among the four with the lowest yield, taxing vehicles weighing more than 18,000 pounds, at rates lower on lighter taxed vehicles than the estimated present payments of gross receipts tax for such vehicles, progressing to higher rates for heavier vehicles, reaching rates on the heaviest group of vehicles, 40,000 and 50,000 pounds, which would be comparable to the estimated present payments of gross receipts tax for such vehicles. The tax rate graduation from lighter to heavier vehicles would be approximately proportional to weight. Of course, no two present gross receipts taxpayers would be affected by a change to a weight-distance tax in exactly the same way, but the intention would be that the average taxpayer would not have a higher tax with the recommended schedule, and in any cases where the new tax proves to be higher, it would be explained by more than average heavy-vehicle mileage. Three other tax rate schedules considered in the report would have a higher yield, but their higher rates is a reason for not preferring them for the present purpose; one based on gross receipts would increase the yield from lighter vehicles and the other two taxing only vehicles above 24,000 pounds would impose about a third higher rate on the taxed vehicles.

Because some businesses have to have their vehicles travel empty nearly half the time, the applicable rate of weight-distance tax depends upon registered gross weight in case of vehicles traveling with a load, but on the unladen weight when the vehicle is traveling entirely empty. There is no tax on mileages run empty if the unladen weight is less than 18,000 pounds.

The weight-distance tax rate schedule that is recommended is by coincidence either exactly the Oregon and New York State weight-distance tax rate schedule or a schedule with the same yield that is so nearly identical that differences might be confusing to interstate taxpayers. The Oregon-New York schedule is almost exactly proportional to vehicle gross weight, and it is a pure coincidence that the estimated yield with that schedule from Virginia carriers for hire would be $1,000,000 and the estimated payments of weight-distance tax by heavier vehicles would be about the same as estimated gross receipts tax payments.

Assuming that it is preferable to use exactly Oregon-New York rates that interstate operators will be familiar with, the recommended schedule may be described briefly by reference to three sizes of vehicles as follows:

Vehicle Weights: 19-20,000 pounds
Legal Rates: $0.006
Estimated Effective Rates Allowing for Empty Vehicles in Virginia: $0.00348

Vehicle Weights: 39-40,000 pounds
Legal Rates: $0.0125
Estimated Effective Rates Allowing for Empty Vehicles in Virginia: $0.00900

Vehicle Weights: 49-50,000 pounds
Legal Rates: $0.0170
Estimated Effective Rates Allowing for Empty Vehicles in Virginia: $0.01292

(If exact proportion to weight is preferred to using Oregon-New York rates, the legal rate figures should begin with .0065. The rate would be .0005 lower on 50,000 pounds vehicles and higher on other weights; the three legal rate figures above would become .0065; .0130; and .0165. The yield over-all would be almost unchanged.)

(Since empty vehicles would be taxed on their weight empty, and there are more empty vehicles on Virginia highways than on New York highways, the over-all effective rates and average payments would be lower in Virginia than in New York.)

The estimated yield of the weight-distance tax with these rates on vehicles above 18,000 pounds is $5,000,000. This estimate assumes a limited farm truck exemption but no city zone exemption as now allowed under the gross receipts tax. (A city zone exemption is costly in paper work.)

The annual cost to the State of administering the weight-distance tax is estimated as $300,000 or 6 percent of the estimated yield, not including costs of weight enforcement which is a matter of preventing damage to highways rather than of collecting a tax. There would be some extra costs in the first year or possibly longer, but the cost of collection should be less than six percent of yield after a few years of operation. The most of collecting a dollar of weight-distance tax would be a little more than the cost of collecting a dollar of the present gross receipts tax. The assumption is that motor fuel road tax and weight-distance tax will share the cost of administration; both taxes are measured by mileages of travel in Virginia. The State now spends approximately $150,000 to collect the present two taxes, and it should spend $400,000 for motor fuel road tax and weight-distance tax, or somewhat more than $400,000 if the coverage of the motor fuel road tax is broadened. The Commonwealth of Virginia is in a favorable position to collect weight-distance tax equitably.

Weight enforcement now costs $300,000 annually. The authors of the report recommend spending an additional $90,000 annually for weighing but would regard this cost as additional protection of the highways. If counted as a cost of the tax administration, $90,000 is 1.8 percent of the $5,000,000 estimated yield.