Don’t you just love it when a prediction comes true?
Over three months ago a writer for Politics and Cars mused that if special electric meters are installed specifically for the purpose of charging an electric vehicle (EV), someone in government would figure out how to tax that electricity in the same way gasoline is taxed.
Gasoline taxes are supposed to go for repairs and improvement of roads. The gas tax is simply a user tax. You use the roads. You pay for them.
That’s only fair. Right?
However, if EVs use the roads without paying for their use, that is unfair.
The issue is contentious because gasoline taxes generate $45 billion annually to pay for highway repairs.
Let’s say you live in California, and purchased a Nissan Leaf. The car’s $32,000 bottom line would have taken a huge bite out of your budget, but the feds rewarded you with a $7,500 tax credit and the state kicked in a $5,000 cash payout. At $20,000, the Leaf is now affordable, and the three cents a mile operating costs are good news, too.
But now they want to hit you with a new tax?
The rest of us say it’s not fair that we pay a premium of 18.4 cents per gallon (24.4 cents for diesel) to maintain the nation’s roads, help to eradicate potholes, and keep overpasses from falling down while EV drivers pay nothing.
That’s harsh, you think, being a crusader for clean air. After all, you’re saving the planet by decreasing your carbon footprint.
That, in a nutshell, is the debate over whether or not to reform the gas tax as the automobile electrifies.
One way to ensure that EVs pay their fair share is to create an entirely new system that’s not based on what you drive to get there but on how far you drive (pay-per-mile).
I’ll report more on this new pay-per-mile system in my next post.
John Voelcker, senior editor at High Gear Media, explains it this way: “My basic take is that I’m sympathetic to the desire of EV owners not to be taxed, but right now, there’s no mechanism by which EVs are contributing to highway funds. And because people aren’t driving as much, we face a phenomenal shortfall in the Highway Trust Fund.”
Voelcker’s research indicates that U.S. gasoline consumption peaked in 2006, when we used 374 million gallons every day. High fuel prices are also cutting into driving, and thus reducing gasoline tax payouts that pay for road repairs.
America’s fuel tax burden isn’t that much of a burden when compared with other countries. The 18.4 cents is phenomenally lower than the very high taxes Europeans pay—as much as half of the $8 or more they pay per gallon. Fuel tax in Canada is also considerably higher than in the United States.
A little known fact is that the fuel tax is only about 35 percent of subsidies to the U.S. road and highway system. The rest is vehicle taxes (20 percent), tolls (less than 5 percent), general fund appropriations (15 percent), borrowing (10 percent), property taxes (5 percent), and miscellaneous taxes and fees (10 percent).
According to the American Association of State Highway and Transportation Officials, only 53 percent of the state’s roads are in “good” condition, while the others range from “poor” to “mediocre” to “fair.” Apparently the United States has no such thing as a “great” road.
It’s not just the federal government, either. States can and will tax electric vehicles, too, and they’ll already finding creative ways to do it. Washington State is considering the nation’s first fee on EVs to help cover wear and tear on the state’s roads.
The Washington State bill would apply a $100 surcharge for EVs during the licensing process, and it’s already passed the state Senate and is awaiting action in the state House. Washington’s 37.5-cents-per-gallon fuel tax costs the average driver about $200 a year, transportation officials say. That’s equivalent to driving roughly 12,000 miles in a vehicle that gets 23 mpg.
Meanwhile, Oregon legislators are working on a bill that would charge drivers of electric and plug-in hybrid vehicles up to 1.43 cents for each mile they drive, beginning with cars from the 2014 model year. It would cost about $172 per year for a car driven 12,000 miles—about the same as the gas tax paid for a vehicle that gets 21 mpg.
Pardon me, but aren’t these two states that really like EVs because they’re environmentally friendly.
I’m amazed, though, that California didn’t think of it first!
Government’s view of the economy could be summed up in a few short phrases:
If it moves, tax it.
If it keeps moving, regulate it.
And if it stops moving, subsidize it.