Can You Believe This-The Government Wants Us To Go EV but In So Doing They Will impose a gas surcharge

Steve Williams

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How Some States Are Discouraging Electric Car Ownership


Jim Gorzelany Senior Contributor
Cars & Bikes-F

Forbes

In a just issued report, Consumer Reports says electric vehicle owners in some states could see their registration fees skyrocket to the point where they pay up to four times the amount that owners of internal combustion engine vehicles pay in gasoline taxes.

The idea is to make up revenue that’s otherwise lost because electric car owners avoid paying the state tax on fuel. Many states are feeling the pinch at the pump with new cars becoming more fuel-efficient and gas-tax increases not being politically popular.

The gas tax is a source of funds used to pay for road improvements. However, CR notes that it’s not necessarily the primary source. In 2016 (the latest year for which data is currently available) the report notes that state gas taxes accounted for less than 29 percent of state revenues that went to highway funding. The remainder is funded via registration fees, tolls, and other sources of tax revenue.

CR says that seven of eight electric vehicle fees instituted or increased so far in 2019 will swell to the point where they are “extremely punitive” by 2025. Not only will they cost electric car owners far more in fees than conventional auto drivers, but the organization warns they could inhibit widespread EV adoption.

Earlier this year Illinois legislators proposed levying a $1,000 annual registration fee on all EVs. It had previously been an additional $17.50 on top of the standard charge. Predictably, opponents were both vocal and vicious over what would amount to a nearly 60-fold increase in registration charges that would become a major disincentive to EV sales. They included startup company Rivian, which is about to begin manufacturing the first in a new line of EVs at a former Mitsubishi plant in Normal, Ill.

As it turned out, cooler heads prevailed and the so-called “EV tax” was reduced to a more sensible $100 on top of the also-increased annual $158 registration fee assessed for all cars.

Currently, 26 states have extra annual fees for EV owners on the books. Another eight are proposing them. Perhaps ironically, these include states like California and Colorado that otherwise grant EV buyers substantial financial incentives to help spur sales for the sake of reducing tailpipe emissions. Curiously, it also includes a number of states in which very few EVs are sold.

CR says the existing fees in Arkansas and Wyoming equate to paying the state gas tax on a vehicle that gets a mere 13 miles per gallon. Among proposed fees, the highest would be for EV owners in Missouri and Arizona. If enacted, they would essentially charge electric car owners the equivalent of gas taxes to keep cars running that are rated at 9 and 10 miles per gallon, respectively.

Not only that, but since these fees are based on registration, rather than miles driven (gallons of fuel consumed), they tend to be especially punitive to those owning electric cars having shorter operating ranges that are only driven sparingly. What’s more, CR notes that since EVs make up such a small percentage of all vehicles on the road, the added revenue received by hiking up registration fees will still be negligible in the battle to rebuild bridges and patch pockmarked pavement.

Could there be a better way to recover lost gas tax revenue that might not dissuade motorists from going electric? We figure one viable alternative would be to assess higher registration fees based upon a vehicle’s curb weight. Heavier vehicles – especially heavy-duty pickups, buses, commercial vehicles, and big-rig trucks – tend to cause more damage to roads and bridges than do lighter modes of transport. However, given the lobbying power of the businesses that would be affected, this probably wouldn't happen anytime soon.

Another idea some states have been considering is to assess a “use tax” that’s based upon the number of miles a vehicle is driven. One way to determine that would be via data collected by a small transponder that plugs into a car’s diagnostic (OBD II) port. This would be similar to those used by auto insurance companies to reward motorists who drive for only short distances and maintain mannerly driving habits. Privacy and fairness issues (rural drivers who drive more miles than their urban counterparts, though at more fuel-efficient higher speeds, would essentially be penalized) have largely prevented such programs from being implemented.

In the meantime, here’s a rundown of the states that currently charge electric-vehicle owners added fees according to CR’s report and additional information from the National Conference of State Legislatures:

Alabama: $200 annual fee; increasing by $3 per year beginning in 2023.

Arkansas: $200 annual fee.

California: $100 annual fee; starting in January 2021, annual increases will be indexed to the Consumer Price Index.

Colorado: $50 annual fee.

Georgia: $214 annual license fee. The fee is automatically adjusted on an annual basis.

Idaho: $140 annual fee.

Illinois: $100 annual fee.

Indiana: $150 annual fee.

Iowa: $65 annual fee; increases to $130 in 2022.

Michigan: $135 annual fee, indexed to the state gas tax.

Minnesota: $75 annual fee; an increase to $250 is being proposed.

Mississippi: $150 fee; beginning July 1, 2021, it will be indexed to the inflation rate.

Missouri: $75 annual fee; an increase to $210 is being proposed.

Nebraska: $75 annual fee; an increase to $125 is being proposed.

North Carolina: $130 annual fee; an increase to $230 is being proposed.

North Dakota: $120 annual fee.

Ohio: $200 annual fee.

Oregon: $110 annual fee beginning on January 1, 2020.

South Carolina: $120 biennial fee.

Tennessee: $100 annual fee.

Utah: $60 annual fee for EVs; it increases to $90 in 2020 and $120 in 2021. In 2022 increases will be indexed to the consumer price index.

Virginia: $64 annual fee.

Washington: $225 annual fee.

West Virginia: 200 annual fee.

Wisconsin: $100 annual fee.

Wyoming: $200 annual fee.
 

jeff1225

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Jan 29, 2012
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States constantly have to restructure their tax schemes to keep up with technology. I see nothing wrong with EV owners paying their fair share to use the roads.
 
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Steve Williams

Site Founder, Site Owner, Administrator
States constantly have to restructure their tax schemes to keep up with technology. I see nothing wrong with EV owners paying their fair share to use the roads.
Fair share is one thing but states like Illinois that wanted a $1000 surcharge initially is gouging IMHO. I see they have come down to $100
 

jazdoc

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Aug 7, 2010
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Fair share is one thing but states like Illinois that wanted a $1000 surcharge initially is gouging IMHO. I see they have come down to $100

Illinois is a fiscal dumpster fire. Charging $1000 to the clientele of electric vehicles such as the Tesla is a way to raise revenue on the higher income brackets...
 

LenWhite

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Feb 11, 2011
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State governments shouldn't be doing anything to discourage EV sales. They need to find another source of revenue for gas tax supported projects. Everyone benefits from mitigating climate change.
 

PeterA

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Dec 6, 2011
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Steve, thanks. Quite interesting. Are there really that many EVs out there to affect state highway funding?

IMHO, It always comes back to who is paying for whom. Advocates are advocating for free public transportation in urban centers because mass transit systems lose money. Funding may soon come out of general funds. Free for some, and increasingly more expensive for others - even those who don't use public transportation. It's complicated.
 
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KeithR

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May 7, 2010
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EVs shouldn’t get special treatment in 2019, especially considering who mostly owns them (rich people).

The registration fees are more egregious- see California. I think mine is over $500/year into the black hole general fund.
 

BlueFox

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Nov 8, 2013
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EVs shouldn’t get special treatment in 2019, especially considering who mostly owns them (rich people).

The registration fees are more egregious- see California. I think mine is over $500/year into the black hole general fund.

From the original post.

"California: $100 annual fee; starting in January 2021, annual increases will be indexed to the Consumer Price Index."
 

BlueFox

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Just quoting from the original post. If you have different data then please post it.
 

howiebrou

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Jun 29, 2012
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It would be interesting to see which legislators that support these EV increases take oil money vs. those that take EV money.
 
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BlueFox

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I think it jumps, and if there is another attack then the sky is the limit.
 

DonH50

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Jun 22, 2010
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In Colorado the gas tax is 40.4 cents/gal (http://www.gaspricewatch.com/web_gas_taxes.php ). I gas up about once a week at about 15 gallons per fill-up so pay about 15 gal/wk * 52 wk * 40.4 c/gal = $315.12 USD per year in gas taxes. Then there are my wife and kids... IL is 62.8 c/gal, CA and NY around 69 c/gal, so they pay significantly more. By that token $100/yr is cheap plus the car and much of the energy is subsidized. There are of course federal and state energy taxes and so forth.

<Gov't taxation and income redistribution rant elided...>
 

spiritofmusic

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Jun 13, 2013
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Absolutely, this is one way to force the Yemen war into the focus of Westerners who will finally show an interest.
 

Folsom

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Oct 25, 2015
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Do EV vehicles use the road any less? That tax goes to keeping roads in usable condition. So until something else picks up the slack I think this is a legit concern. Gas buyers are offsetting the costs of your EV vehicle (and you're rich, they're not, says Keith :D).

In some states they collect the tax in different ways which is interesting because people who don't commute by car pay a disproportionate amount. Montana is one, so for example a bicyclist from a monetary stand point has more entitlement to the road than a car (although cars tend to protest that, like absolute jerks, frequently in MT).
 

NorthStar

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Feb 8, 2011
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Should we reward the ecology friendly people (EV drivers), and penalize and tax to the max the polluters and destroyers of human and planet health (ICE drivers)?
 

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