Well at least it was fun while it lasted. The tax-free joyride electric and hybrid-electric vehicle owners have been enjoying while cruising the highways and byways of America may soon be a thing of the past. A handful of states and the U.S. Government are looking at “vehicle miles traveled” (VMT) standards and other fees for plug-in vehicles to make up for the tax revenue not collected via gasoline taxes. While electric vehicle advocates say it is too early to tax the emergent EV industry, VMT supporters say consumers pumping gasoline into their vehicles shouldn’t have to shoulder all of the tax burden for road and highway repair and maintenance.
Under the current system in the U.S., unlike most other industrialized countries, funds for road construction and repair come directly from local, state and federal gasoline taxes paid at the gas pump. But as vehicles become more fuel efficient and as gasoline prices rise, revenue from gasoline taxes, which range from thirty-two to thirty-five cents per gallon in Wyoming and parts of the south, to over sixty-five cents per gallon in states like New York and California, dip and state and federal transportation budgets feel the pinch.
Three states, Oregon, Washington and Texas are looking at different ways of bringing electric cars and hybrids into the mix. And it’s not just states that are facing a rough road for transportation budgets, the U.S. Government is looking for ways to stabilize current and future transportation revenue. The federal gasoline tax hasn’t increased since 1993 and the government has transferred nearly twenty billion dollars from the general revenue fund into the federal highway trust fund since 2008.
In Oregon, a bill would charge drivers of electric and plug-in hybrid vehicles 1.43 cents for each mile they drive. The law, which is being watched closely as a possible model for other states, would go into effect beginning in 2014. Currently, American drivers pay on average about two cents per mile in state and federal taxes.
“It’s a fairness issue,” said Sen. Bruce Starr, a Republican from Hillsboro, Oregon, a proponent of the VMT bill. “They’re not paying any gas tax. Everyone else is paying, why should they get a fair ride?”
Although it is not clear how the miles would be tracked and taxed by the state, a pilot program tested two years ago in Oregon that tracked mileage via GPS satellite and collected taxes at filling stations is one possible route suggested in a new Congressional Budget Office (CBO) report.
Privacy issues aside, if GPS programs are developed to track VMT, they can also be used to track and encourage behavior with so-called “congestion pricing” programs that charge drivers additional fees for operating vehicles in urban areas or at certain times of day. Congestion pricing programs have already been implemented with some success in cities like Singapore, London and Stockholm. And the ability to monitor driver behavior has already caught on with insurance companies rewarding drivers with safe driving habits, or even selling insurance by the mile.
In Washington, the proposed EV fee is facing more pushback because it is not tied to vehicle use, but rather applies a flat tax to all EV and hybrid vehicles registered in the state. While that tax model makes it easier for the state to assess and collect revenues, it’s not exactly a model of fair taxation.
While most EV supporters do recognize the need to pay for road upkeep, many advocates are also concerned it is just too early to tax the already expensive plug-in vehicles, especially as the industry is only in its infancy — and especially when governments are trying to encourage the purchase of cleaner, more fuel efficient cars and trucks with state and federal incentives over $12,000 in states like Colorado and California. Of course, consumers also need to have the tax liability large enough to take full advantage of those tax credits.
Article by Timothy Hurst, appearing courtesy ecopolitology.
