By Kristen Walker, American Consumer Institute
On September 1, Texas joins a handful of states charging electric vehicle (EV) drivers an extra $200 to register their automobiles each year. Why? To collect transportation taxes they haven’t being paying for road usage. Those who drive internal combustion engines (ICE) are unfairly burdened with the expense of road repair and maintenance.
These expenses are collected by way of state and federal gas excise taxes, of which the former was introduced in states as early as 1919 and the latter in 1932. The basic concept of a gas tax is the notion that people should be taxed based on how much they benefit from government spending, in this case, on roads and highways. This system was equitable for decades since every vehicle on the road consumed gasoline and utilized the highway infrastructure.
But not so much anymore.
It is estimated that more than two million EVs are on the roads today, and that number could swell to 26.4 million by 2030. If Joe Biden has his way, EV’s will comprise 50% of all new car sales by that same year.
Regardless of whether or not these statistics seem overly ambitious, there are and will continue to be electric vehicles on the road. Yet only some are paying for road upkeep, maintenance, and construction, something for which all ICE vehicles are forced to pay every time they fill up their cars. Currently, only 33 states have extra registration fees for EVs to help offset the gas tax(es) they do not pay; the other 17 have none.
If the average driver logs 13,500 miles per year and the average ICE vehicle gets 25 mi/gal, then the average ICE motorist consumes roughly 540 gallons a year. With the national average for state gasoline tax at 32.26 cents a gallon and the federal excise tax at 18.4 cents, the average American is paying $273 in gasoline taxes each year.
The average EV tax is $127, with the range between $50 and $225.
Not surprisingly, California has the highest per capita EVs on the road. Also, not surprisingly, its gasoline taxes are the highest in the nation. Motorists at the pump pay a state excise fee of 58 cents per gallon plus an approximate 3.7% state and local sales tax which adds another 10 cents. The average ICE motorist in California is paying approximately $466.56 each year on federal, state, and local excise taxes. These expenses don’t even include the costs from cap-and-trade, low-carbon fuel programs, and underground gas storage fees. The annual EV tax for the state is only $100.
Illinois has motorists paying a total of 85 cents in state and federal taxes, for an annual total of $459. Their annual EV tax is also only $100.
Now take Pennsylvania. Motorists are paying 80 cents a gallon in state and federal taxes. That equates to approximately $432 in gas taxes a year. Electric vehicle owners pay absolutely nothing. They are essentially getting a free ride when it comes to funding the roads and bridges they use. And they’re not the only state.
Vermont, District of Columbia, Nevada, New Jersey, Massachusetts, and Maryland all have relatively high per capita EVs on their roads. Yet not one of these states charges the owners extra registration fees. The ICE motorists are subsidizing them.
Individuals who own EVs are typically upper-class with an annual household income of at least $100,000. Tesla owners, who make up 64% of the EV market, generally make over $130,000. The U.S. median household income is $70,784. Not only are these wealthy EV owners receiving a $7,500 tax credit plus state rebates for their purchase, they are contributing little to nothing for the roads and bridges they are using. While they more often lean politically to the left, it would appear they are, ironically, the ones not paying their “fair share of taxes.”
Perhaps EV drivers should actually pay more towards road maintenance, since it has been shown that their vehicles cause twice as much damage as ICE vehicles, due to their heavier weights.
A handful of states have added a per-kilowatt hour tax to public EV charging stations; a few others will soon follow. And three states give drivers the option to participate in road usage programs measured by miles traveled. If paying a fair share is a goal, this is not enough.
It is past time for EV owners to fully contribute to local, state, and federal transportation funds. The burden is unfairly placed upon gas-powered vehicle drivers.
Kristen Walker is a policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on Twitter @ConsumerPal.