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Willing to Pay Extra Tax to Drive an Electric Vehicle?
A new trend in the electric vehicle industry is emerging. Several states are proposing a gas tax on vehicles produced in 2015 or later that get 55 miles per gallon or more. Cars like the Chevy Volt, Nissan Leaf, and Toyota Prius are just some of the cars that will incur this per-mile fee.
Taxes on gasoline provide approximately 60 percent of the funding every state needs to complete necessary road projects. With more hybrids and electric vehicles on the road today, consumers are purchasing less gas, which results in states collecting less tax money. Consequently, new sources of funding must be implemented.
Officials believe that the solution is to charge a per-mile user fee for those who do not require as much gas. House Bill 2453 would charge 1.56 cents per mile, which is equivalent to the amount of gas taxes the average vehicle user will pay. At this rate, if an electric vehicle owner drives 15,000 miles per year, the annual charge would be $234.
In contrast to a traditional gas tax collected at the pump, determining and collecting a per-mile fee will be a challenging endeavor. On-board GPS equipment and cell phone applications are two options that would track and record the miles traveled on state roads, but many feel this is an extreme violation of privacy. One alternative is to require a mileage plug-in device on each vehicle which will not track the vehicle’s actual location. The downside is that, unlike a GPS, it would not be able to differentiate miles traveled on state roads and those traveled on private and out-of-state roads. A second alternative would be to simply charge electric vehicle owners a flat annual fee. Finally, some lawmakers are suggesting all cars receive an increase in vehicle registration fee, which directly contributes to the transportation fund.
AAA lobbyist Craig Campbell commented, “You have folks in pickup (trucks) who are paying far more than their fair share and you have folks in hybrids or electric vehicles who are paying nothing to the roads systems.”
With Obama’s recent requirement of all new U.S. vehicles possessing 55 mpg or better by 2025, states will certainly come to a decision and find a way to implement some variation of this tax, but will it discourage consumers from purchasing these efficient vehicles? A major benefit of electric vehicles is their low cost of operation, but if states begin applying additional taxes, some citizens may feel the purchase is not worth the extra fee. Furthermore, many of these drivers charge their electric vehicles at home and already pay the taxes being charged on their monthly electric bill. Will consumers be willing to pay a tax on their vehicle twice?
Most fuel efficient vehicles already possess a high price tag, and with the government spending millions of dollars building charging stations and offering financial incentives, officials will want these cars to sell. Paul Cosgrove, lobbyist for the Alliance of Automobile Manufacturers, shares his concern, “If you talk to your local car dealer, you’ll find they are not so easy to sell. Our concern is to protect the market that we are trying to grow.”
House Bill 2453 is considered a “tax-raising measure” and will require three-fifths approval in the House and Senate. States including Oregon, Washington, Virginia, and Texas are all pushing for this bill to pass. But what will happen to electric vehicle sales if this bill is approved? Would you purchase one if you knew you would have to pay an additional tax? Share your thoughts in the comments section below.
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