More states hitting EV owners with high fees
A number of states are charging electric vehicle owners fees that experts and consumer advocates say are higher than what the drivers of equivalent gas-powered vehicles are paying in gas taxes, potentially discouraging an important environmentally friendly technology.
Almost all states have gasoline taxes to help pay for transportation projects, and electric vehicle owners avoid them because pure EVs don’t use gasoline. But many legislatures are looking at extra fees to make sure all vehicle owners pay for roads.
A new Consumer Reports analysis shows that of the 26 states that currently impose EV fees, 11 charge more than the amount owners of similar gas-powered cars pay in gas taxes, and three charge more than twice the amount. And the trend is potentially for more EV fees: Among the 12 states considering proposals, 10 would have fees greater than what a driver on average would pay in gas taxes. Seven of those states would ratchet up the fees over time to twice the amount.
“People should be allowed to choose a vehicle that’s safe, reliable, and better for the environment without being punished,” says Shannon Baker-Branstetter, manager of cars and energy policy at Consumer Reports.
Baker-Branstetter says that the fees on electric vehicle drivers don’t do much to solve state road spending shortfalls, and they’re also unfair to the average family trying to save money on gas by buying an EV.
For the analysis, CR compared existing and proposed EV fees with how much in gasoline sales tax the average driver pays over a year in each of the states. In most states that have them, EV fees are paid annually by the vehicle owners.
In Missouri, there’s a proposal to increase the existing EV fee to three times what the owner of a gas-powered car would pay next year in the state, and the fee would increase to four times the amount by 2025, according to CR’s analysis.
Missouri’s proposed EV fee was set with the help of state senate research staff and experts at the state transportation department, says Senator Gary Romine, who was the main sponsor of the legislation. Most transportation funding in Missouri comes from a consumption tax on gasoline, says Romine, who serves as vice chairman of the state Senate Transportation, Infrastructure and Public Safety Committee.
“Obviously, electric vehicles have no consumption that is taxable that makes its way to the Transportation Department,” he told Consumer Reports. “These fees would be a way for electric car owners to pay their fair share for maintaining the roads and bridges in the state. We’re not trying to penalize the electric car owner.”
Illinois proposed a $1,000 fee on EV owners earlier this year. After an outcry, it was reduced to $250. (Still, that’s $100 more than an owner of a gas-powered car would pay, on average.)
The move in some states to higher EV fees has been spearheaded by the American Legislative Exchange Council, which drafted a model resolution to support “equal tax treatment for all vehicles.”
ALEC’s resolution calls for eliminating EV tax credits and increasing user fees so that “all vehicles using public roads share in the cost.” The group contends that because the vehicles have heavy battery packs onboard, they exact a greater structural toll on roads than equivalent gas-powered passenger cars.
For example, a Nissan Leaf weighs 3,440 pounds, a thousand pounds more than a Versa compact, a gas-powered model similar in size and with room for the same number of passengers. The Leaf weighs about 200 pounds more than the larger, roomier Altima sedan.
ALEC describes itself as a group advancing policies for limited government, free markets, and federalism. The group didn’t respond to CR’s request for comment.
Vehicles and Road Damage
The weight argument doesn’t ring true to Robert Atkinson, an economist at the Information Technology and Innovation Foundation, who chaired a national commission on infrastructure financing in the 2000s. The amount of road damage caused by any kind of car, SUV, or pickup truck is minimal, Atkinson says. Almost all of the degradation to roads and bridges comes from heavy-duty trucks, he says.
“This isn’t a real issue,” Atkinson says. “If they’re really worried about damage to the roads, the thing to do is to tax heavy-duty trucks.”
Atkinson also contends that any EV fee should be set less than what the driver of an equivalent gas-powered car would pay in gas taxes, because EVs don’t pollute as much, and there are fewer government costs in dealing with the environmental impact. He adds that it’s probably a mistake to tax EVs at all for the next several years because the nascent technology is still trying to make inroads. Five years from now, it might be a self-sustaining technology, he says.
At least one state contemplating a special EV fee has tabled the idea as potentially harmful to widespread adoption of the technology. Vermont lawmakers backed off of a plan to increase EV fees after the state’s Agency of Transportation concluded that fees shouldn’t be increased “in the immediate future and not until the market for EVs moves beyond the ‘early adopter’ phase.” Moving consumers over from gasoline-powered cars to EVs is “essential to meeting the state’s short and long-term climate and energy goals,” the agency said.
At the end of 2016, there were fewer than 1,400 EVs registered in Vermont. By 2025, EVs could make up 15 percent of the state’s total vehicle registrations, at which point an EV fee would make good policy sense, the agency concluded.
For some state lawmakers, EVs have gained a reputation as $100,000 cars with owners who can afford to pay the fees, says Nicolas Loris, a Heritage Foundation economist who focuses on energy, environmental, and regulatory issues. He also points out that EV owners have benefited from federal tax breaks of up to $7,500. And because California has the lion’s share of EVs in the U.S., there’s a perception that middle-class taxpayers in states such as Ohio and Pennsylvania are subsidizing richer, coastal states, he says.
“The federal gas tax is intended to pay for the cost and maintaining the highway system,” Loris says. “It is literally highway robbery that EV owners don’t pay into the system.”
Max Baumhefner, staff attorney of the climate and energy program at the Natural Resources Defense Council, says the reality is much different, because most of the 1.3 million EVs on the road today were bought as used cars. That’s because they’re typically bought on leases, then sold used after two to three years to low- and middle-income people, many looking to save money on gas, he says.
But for states and the federal government, EVs are needed to accomplish the key goal of electrifying transportation in order to meet air-quality goals and to reduce the output of greenhouse gases, he and other advocates have said.
“The misperception that electric vehicles are just for rich people who can afford these ever-increasing fees is a big problem,” Baumhefner says. “These increasingly onerous fees undermine the fundamental economics of electrifying the transportation sector.”
Source: Consumer Reports