Econintersect: If an activity is undesirable, tax it. If an activity should be encouraged for the public good, offer tax breaks. These have long been accepted principles. It has worked well in reducing tobacco usage in the U.S., from more than 40% of the population decades ago to less than 20% today.
It must be that use of electricity to reduce the use of petroleum fuels in automobiles is an undesirable activity because several states are proposing special taxes and assessments on all-electric and hybrid-electric vehicles to compensate for the reduced taxes they pay on petroleum based fuels. The logic is that those vehicles are using roads supported by fuel taxes without paying the taxes.
Click on picture for larger image.
The state of Washington has enacted a $100 a year highway usage fee for all-electric vehicles, such as the Chevy Volt, Tesla Model S and Nissan Leaf. Washington is not adding any new taxes for hybrids. Other states, including North Carolina, Virginia, Arizona, Michigan, Oregon and Texas, are considering variations on the theme.
New Jersey is considering legislation that would eliminate fuel taxes and implement a charge for all vehicles at the rate of 0.00839 cents per mile driven. That would be $83.90 for 10,000 miles. A New Jersey driver now pays $0.145 per gallon gasoline tax. For a 30 mpg car that amounts to about $48 per 10,000 miles; at 20 mpg, $72.50; and for a heavy duty 4WD pick-up truck getting 12 mpg, $120.83. Thus, the new proposal would be more costly for economy car and luxury car drivers and benefit heavy duty SUVs and “work” trucks. Econintersect suggests that a better mileage charge would be scaled for vehicle weight to make the assessments more equitable, as well as a more appropriate charge for highway “wear and tear”.
Virginia has proposed legislation which would replace the fixed tax per gallon with an added sales tax for gasoline (3.5%) and diesel (6%). Since Virginia has a $0.176 per gallon tax today the break-even point for consumers would be $5.83 per gallon for gasoline and $2.92 for diesel. Above those prices the new proposal would collect more tax. The Virginia legislation also includes a $64 per year registration surcharge for EVs, hybrids and vehicles using alternative fuels such as biodiesel and natural gas.
The North Carolina proposal is for a registration surcharge for both all-electric and hybrid vehicles, $100 per year for the former and $50 for the latter. Here is the wording of the proposed legislation (from Bruce Siceloff, Raleigh News&Observer):
ADDITIONAL ANNUAL FEE FOR ELECTRIC AND HYBRID VEHICLES
SECTION 34.21.(a) G.S. 20‑87 is amended by adding the following new subdivisions to read:
“(13) Additional fee for certain electric vehicles. – At the time of an initial registration or registration renewal, the owner of a plug‑in electric vehicle that is not a low‑speed vehicle and that does not rely on a nonelectric source of power shall pay a fee in the amount of one hundred dollars ($100.00) in addition to any other required registration fees.
(14) Additional fee for certain hybrid vehicles. – At the time of an initial registration, or registration renewal, the owner of a hybrid vehicle that is not a low‑speed vehicle shall pay a fee in the amount of fifty dollars ($50.00) in addition to any other required registration fees.”
Econintersect suggests the following things are being missed by many of the legislative proposals:
- Taxing hybrids that have mileage performances in the 40 to 50 mpg range is then giving an unwarranted advantage to all petroleum fueled vehicles with similar fuel performance, such as Chevrolet Cruze Eco (42 mpg highway), Dodge Dart Aero (41 mpg highway), VW Golf Diesel (42 mpg highway), VW Passat Diesel (43 mpg highway), Honda Civic HF (41 mog highway), VW Jetta Diesel (42 mpg highway), VW Beetle Diesel (41 mpg highway), Audi A3 Diesel (42 mpg highway) and the following all rated 40 mpg highway: Ford Fiesta SFE, Fiat 500 Pop, Chevrolet Sonic, Kia Rio Eco, Hyundai Elantra, Mazda3 iTouring, Hyundai Accent, and Hyundai Veloster. What is the logic in surcharging a Toyota Camry hybrid getting 40 mpg and not doing the same for all of the above?
- Vehicles getting 40 mpg and higher are reducing demand for petroleum based fuels. This should, on average, reduce the price of gasoline and diesel. Wouldn’t it be logical, if one is going to surcharge high mileage cars, to surcharge the remaining vehicles for their reduced fuel costs and rebate that to the high mileage vehicles?
- Surcharges based on vehicle type are filled with inequities and convoluted paths for correction. A logical path to fund highways based on vehicle usage is to eliminate gasoline taxes at the state and local level (except possibly for regular sales tax) and replace them with assessments based on vehicle weight and mileage driven.
Sources:
- New taxes make electric vehicle owners pay their share (Damon Lavrinc, Wired, CNN Tech, 09 May 2013)
- Prius, Tesla, Volt drivers et al: Ready to pay new hybrid / electric car fees? (Bruce Siceloff, Raleigh News&Observer, 23 May 2013)
- Which State Pays Most In Gas Taxes? (Kelly Phillips Erb, Forbes, 29 April 2013)
- America’s most fuel-efficient cars (Evan Griffey, MSN Autos)
- 15 Most Fuel-Efficient Cars, 2013 (Jessica L. Anderson, Kiplinger, January 2013)
