Gas v. Electric Justification --- Accounting for road taxes

Shhhhhhhhhhhhhhhh!

I think it was Washington or Oregon that already floated an EV tax to make up for lost revenue.

I don't know what the percentage of Missouri's (St. Louis area) gas prices are actually taxes.. but Missouri does require all alternative fuel vehicles (ie electric, LP, etc etc) to purchase an alternative fuel decal annually for $75. It is a large, ugly orange sticker that I am supposed to put on my front windshield. Did I mention it was large and ugly.. so yeah, it lives in my glove compartment (tip from LizG).

We're not getting anything for free here; additionally Missouri offers no tax incentives for purchasing an EV. Though I am curious how many gallons of gas equivalent the $75 represents. I should look that up.

With the way gas prices have soared in the last decade, taxes (usually around $0.20/gallon) are no longer a huge factor in the price per gallon, so I don't think adding this in would have a huge effect on the economics.
Furthermore, a ton of CO2 in the atmosphere causes economic damage to Americans. Estimates about this cost vary wildly, but a social cost of carbon at around $0.11 per gallon of gasoline is commonly cited. That means that if Model S were asked to pay its "fair share", it would be less than what a fossil fuel powered car would need to pay.

Of course, I also got $10k of government kickbacks from buying my car, which is a lot more than the gas taxes I paid on my gasoline car. Clearly the federal and California governments believe that the state's interest is better served by encouraging electric vehicles rather than by taxing them.

Most of the taxes/fees are pretty straightforward, so easy enough to work into a calculation. Here in Virginia, it was a $64 annual fee, the same as for the Plug in Prius which I re-registered at the same time as my Model S. The fee, as of today, is now $100. There really is pretty much zero incentive in Virginia to own a fuel efficient vehicle, other than your own conscience. Gas is cheap with near zero gas tax, no tax rebates or credits for purchase of an EV. Northern Virginia owners used to get a break on HOV lane decals, but I don't think that even applies anymore.

steve841 said:

Shhhhhhhhhhhhhhhh!

I think it was Washington or Oregon that already floated an EV tax to make up for lost revenue.

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Washington would tax the air you breathe if they could. I want my Monorail tax back for all those years I was promised something that was never delivered. Did anyone receive any refunds? Of course not…

I believe here in AZ they have lowered the alternative fuel license tax to crazy low numbers, which I'm sure is going to change as EVs catch on.

I did the math.

For the record, I have a Toyota Camry that gets 30mpg. Thanks to a smatphone app, I can detail EXACTLY how much I've spent on gas since April of last year. I can tell you how many gallons I've gone through.

Now, of the $3-$4/gallon I've paid, a piddling *38 CENTS* of that is for taxes - combined federal and state (assuming NH since I almost always fill up near home). I've averaged 55.2 gallons per month. That means I've paid less than $21/month in taxes (versus the nearly $200/mo I'm paying, overall, for gas).

Go ahead. Hit me with a $250/year surcharge on my registration. That's 5 weeks worth of gas. I'll take the other 47 for free.

I firmly believe in paying for what I use and the roads and bridges HAVE to be paid for.

I also believe road taxes, for the purpose of maintaining roads should be paid for by all drivers, EV or otherwise.
However, there should not be a separate EV tax and hybrid tax, and biofuel tax and etc etc....
Rather, all vehicles should be taxed based on vehicle weight and miles driven.
One rule for all vehicles, which also has the advantage of taxing any other alternative fuel vehicles automatically rather than having to create yet another law/regulation.

Zythryn said:

I also believe road taxes, for the purpose of maintaining roads should be paid for by all drivers, EV or otherwise.
However, there should not be a separate EV tax and hybrid tax, and biofuel tax and etc etc....
Rather, all vehicles should be taxed based on vehicle weight and miles driven.
One rule for all vehicles, which also has the advantage of taxing any other alternative fuel vehicles automatically rather than having to create yet another law/regulation.

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I wholeheartedly agree. The odometer reading should be documented at the time of license tag renewal and used (in addition to weight) as the basis for a tax on top of the standard renewal fee. That will take into account all vehicles regardless of their energy source. The only caveat would be for manufacturers to insure that the odometers cannot be tampered with.

Zythryn said:

I also believe road taxes, for the purpose of maintaining roads should be paid for by all drivers, EV or otherwise.
However, there should not be a separate EV tax and hybrid tax, and biofuel tax and etc etc....
Rather, all vehicles should be taxed based on vehicle weight and miles driven.
One rule for all vehicles, which also has the advantage of taxing any other alternative fuel vehicles automatically rather than having to create yet another law/regulation.

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The only problem with this thinking is: It gives the government another revenue stream!

Is anyone foolish enough to actually believe that if they instituted a mileage based tax that gas taxes would be removed?
Ever wonder about those toll roads? Where's all that money going? Certainly we are not seeing it reinvested into roads. If that were the case, potholes would be non-existent.

Here in FLA, the tolls on our turnpike were to stop once it was paid for .... as of yesterday, they just raised them again.

Give politicians an opportunity to take you money and they will gladly AND PERMANENTLY take you up on the offer.

lolachampcar said:

Just remember, we elected all those people doing a poor job. Perhaps we would do better choosing on administrative capability instead of cult of personality or ability to raise and spend money. Funny, we hire the gal/guy that can spend the most then are pissed when they do........

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As the old saying goes, "you get the government you deserve".

As far as taxes go, earmarking of taxes is pure marketing--all taxes can be considered to ultimately go to general revenue, and so are all equal. Consider, if there was no fuel tax, the government would still have to build roads and would pay for it out of general revenue. And ask yourself, how closely does infrastructure spending track fuel tax revenue? I'm willing to bet without checking in advance that the correlation isn't that strong.

Just about every country taxes fuel. Only a few say fuel taxes are for road building, yet they all have roads.

Moreover, earmarking is probably a bad policy in most cases. Consider lottery revenues which are in many countries said to be allocated to sports and community projects. Is the optimal amount of sports spending equal to the amount people want to spend on lottery tickets? Only by the wildest coincidence. Governments that really restrict themselves to setting spending according to a particular source of tax revenue are usually making a mistake.

/wonkery over

I am fully behind taxing EVs (perhaps all vehicles) based upon miles driven, that is the only fair way to assess roadway use. Taxing gasoline by the gallon only addresses how much gasoline you buy, which may have little or no bearing on whether you are actually using the roadways. Gasoline goes into a lot of things - lawnmowers, tractors, generators, etc. I am 100% for owners of ICE vehicles paying two taxes - one at the pump and one at registration for miles driven. The pump/gas tax will then essentially be a "carbon tax" or a penalty for using gasoline. Buying gas would incur a tax penalty just like buying tobacco.

derekt75 said:

With the way gas prices have soared in the last decade, taxes (usually around $0.20/gallon) are no longer a huge factor in the price per gallon, so I don't think adding this in would have a huge effect on the economics.

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Depends on where you live, but nowhere in the US has taxes as low as 20c/g: Wiki article for taxes by state. National average is 48.8c/g, lowest being 26.4c/g in Alaska and highest being 69c/g in New York. With the national Average of regular gallon of gas being ~$3.48, it's at about 14% tax rate. Not huge, but nothing to sneeze at.

Brandonm said:

Depends on where you live, but nowhere in the US has taxes as low as 20c/g: Wiki article for taxes by state. National average is 48.8c/g, lowest being 26.4c/g in Alaska and highest being 69c/g in New York. With the national Average of regular gallon of gas being ~$3.48, it's at about 14% tax rate. Not huge, but nothing to sneeze at.

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oh, thanks.
Apparently the number I saw was either federal taxes alone or state taxes alone rather than the two combined.

AmpedRealtor said:

Buying gas would incur a tax penalty just like buying tobacco.

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Not a personal attack... But how shortsighted. Rising tobacco taxes don't quite have the same ripple affect through the economy.

But those are state + federal taxes. I would assume a state based usage tax would only look to recoup the state portion sans the 18.4 cents federal portion. For example, California is going to be losing out on about $650 from me in the next 12 months. Since its California, they might be OK with this, but I am thinking most states are not going to be as accommodating.

That being said, I think this is a bit of a flawed analysis--we really need to look at the total costs for electricity generation/distribution vs oil importation/refining/distribution to have a better understanding of net economic impact of a shift from ICE to EV. Hopefully, this is something Elon and company are working up to help our various state legislatures make some more enlightened decisions.

steve841 said:

The only problem with this thinking is: It gives the government another revenue stream!

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Uh, sorry but that simply isn't correct. A big problem for most states is that they levied a per gallon tax on gas. In WA, it's 55.9 cents/ga. Even with out EVs, ICE efficiency is improving, mandated by the CAFE standards, and thus each car consumes less gas per year. So tax revenues are falling. The "great" recession didn't help much either. These funds are earmarked for transportation in many (most? all?) states. Most states have tightened their belt and not dipped into general funds for road work. That has meant deferred maintenance and so we get potholes and bridges that are in danger of falling down. So, no, this is an attempt to REPLACE tax revenues that are falling.

I too believe we need to pay for our use of the roads. No matter the moral superiority of driving a zero emission vehicle (which I don't feel), we use the roads, we should pay for them. period.

Brandonm said:

Depends on where you live, but nowhere in the US has taxes as low as 20c/g: Wiki article for taxes by state. National average is 48.8c/g, lowest being 26.4c/g in Alaska and highest being 69c/g in New York. With the national Average of regular gallon of gas being ~$3.48, it's at about 14% tax rate. Not huge, but nothing to sneeze at.

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In California were paying 72c per gallon
That's on top of our already expensive blend of gasoline