Several states have proposed taxes for Electric Vehicles like the Nissan LEAF. The motivation to introduce these new taxes is based upon the fact that 100% electric vehicles use no gasoline so pay no tax per gallon of gas. The gas tax is meant to pay for road maintenance, so the argument goes that the EV owner needs to be taxed differently in order to restore parity and fairness, otherwise there will be no money to repair the roads as EV’s make up a larger percentage of total vehicles on the road.
Some of the tax proposals are as follows.
- Arizona – EV’s taxed at 1.43c per mile driven. House Bill 2257 introduced by representative Steve Farley (D-AZ)
- Washington State – $100 per year additional tag fee. SB 5251 sponsored by senators Haugen, Swecker, Sheldon, Hobbs, White.
- Kansas – up to 1c per kWh used for charging an EV, proposed by Representative Tom Sloan (R-KS)
While it seems only fair that EV owners pay the same amount of taxes to the state to help maintain the roads I decided to run the numbers and see how much money each state gets from gas car drivers and EV drivers based on 13,000 miles per year and an expected car life of 11 years. It is quite illuminating, in all states mentioned (except Washington state) the state government will get more taxes from a Nissan LEAF owner vs a fully loaded Nissan Versa without the introduction of any further taxation.
How can that be ?!? This is as a direct result of increased sales tax revenue. EV’s are twice as expensive a similarly sized and equipped gasoline vehicle. EV owners pay considerably more state sales taxes up front which more than compensates for the loss of gasoline taxes. The proposed EV taxes make the inequity even worse for the EV owner. To see how I came to these numbers feel free to download my spreadsheet. I included Tennessee (the state I live in) as a comparison, there are no EV specific tax proposals in Tennessee that I am aware of.
It does appear that Washington State have proposed a bill that is easily enforced and will level the playing field fairly. Washington State have waived sales taxes on EV’s as an incentive, so can and should justifiably get road repair monies through straightforward fees utilizing existing tax administration and collection methods. The Arizona’s and Kansas proposals will be difficult to enforce, require new methods of administering and collecting taxes, and seem to be less practical pieces of legislation overall.
With just 20,000 EV’s on US roads vs 250 million gasoline vehicles, EV’s represent 0.008% of all vehicles on the road as of December 2011. One wonders why the state legislators are so keen to introduce new taxes at this early stage. It’s election year. Some representatives may want to appear to be against Obama’s green incentives, and appeal to anti-Obama sentiments in order to get more votes.
Sloan’s proposal would increase the tax burden of a Nissan LEAF owner by up to $5,000 more as result of this proposal. Currently a LEAF owner stands to pay $300 more than a Nissan Versa purchaser. Why tip the scale even further?
GM spokesperson Lindsay Douglas has openly criticized Representative Sloan, saying
“…..why would we want to continue supporting this technology and pushing forward if what we’re being told is, we’re going to tax this to its death before it gets a chance to survive?” questioned Douglas.
Here’s what Representative Sloan is quoted as saying.
“I believe that such vehicles should pay the equivalent of the motor fuels tax so that they do not “ride free” when gasoline/diesel vehicles pay to maintain the system,” said Sloane.
Clearly Sloan hasn’t figured in double the sales tax revenues LEAF and Volt owners pay into the state coffers. Note I didn’t figure in the sales use tax collected when the vehicle changes hands, which will happen. EV’s are more expensive so use tax from resale of vehicles will stoke the state’s coffers even more.
Showing soon in movie theaters near you – “Who killed the electric car? – The Sequel”
Update: 2013-01-07 I have learned that Oregon want to introduce a 2c per mile tax on EV drivers. They have no sales tax in Oregon so I did the math quickly by updating my spreadsheet. They stand to double their tax revenue on EV drivers vs Gasoline drivers, and introduce a new tax collection system that will cost extra money to administer. They should take Washington States lead and simply tax a flat fee at annual registration time. $122 per year would be fair in Oregon.