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Making the transition to electrified vehicles will bring with it a vast array of issues that will need to be dealt with. There are, of course, the obvious problems of charging EVs in urban areas and disposal and recycling of batteries. Then there is the problem of taxation. Vehicles need paved roads to travel on. Paving costs a lot of money. While there are some toll roads in the U.S. that drivers pay to traverse, most infrastructure is financed through fuel taxes. The presumption is that the amount of fuel you use is roughly in proportion to your use of the roadways and this system has sort of worked for many decades. Of course, the system isn't perfect, since some states, like Michigan, have gotten back far less than they have contributed in federal fuel taxes.

Electric vehicles are coming soon in a serious way, and will still be using the nation's roads. However, since drivers won't be filling them with liquid fuel, they won't be paying those road taxes. There have been numerous proposals about how to replace this revenue, including various pay-per-mile schemes. The state of Washington currently has a bill under debate that would impose a $100-per-year registration fee on electric vehicles to cover the cost of roads. However, this particular proposal, like most flat taxes, is far to simplistic and doesn't account for the nuances inherent in the real world.

For example, the new fee only applies to pure electric vehicles like the Nissan Leaf and Mitsubishi iMiEV. Vehicles that still have an engine onboard – like the Chevrolet Volt and Toyota Prius PHEV – would be exempt since they would still presumably use some fuel. The problem is most of these vehicles will use far less fuel than a conventional ICE vehicle and get off disproportionately cheap. Any solution to the issue of paying for roads will have to be a bit more complex this. One possibility is to use smart metering systems to apply a per-kWh tax when electricity is used for vehicle charging. This, of course, has its own issues since those that use solar or wind to get off the grid would also not pay for road use. Perhaps a GPS based per-mile rate (factoring in weight somehow, since that also affects road wear) is the only real solution. Have your say in the comments.

[Source: All Car Electric]


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  • 40 Comments
      • 2 Months Ago
      First and foremost, KISS... keeping any program simple makes the most sense. Forget GPS' and in-car meters. Why make this complicated?

      I, too, believe that early taxation of EVs, PHEVs, Hybrids and Fuel-cell vehicles is a bad idea. Incentives should be in place at every turn support a choice to buy such cars, rather than to discourage buying them in favor of a petro-pig.

      That said, what about taxation on the basis of CO2 tailpipe output (and CO2 equivalency in EVs)?

      Such a tax would 1) link taxes to CO2, which, in spite of the opinion of some in Congress, is a disincentive to pollute, and 2) would still reward drivers who make a better choice when it comes to vehicle fuel efficiency.

      If you use your vehicle for business, then a tax deduction based on miles driven each year, may be a way to offset the inequity (similar to what we currently do when reporting vehicle expenses on tax forms).
      • 2 Months Ago
      I don't see the big problem. In fact, I'd suggest making it even simpler. . . $100 annual tax for all passenger vehicles regardless of power source. Just roll it into the registration fees.

      I'm not sure I understand all this hand-wringing over "fairness". Everybody who drives a car -- regardless of how much or what kind -- benefits from having a maintained road system. The purpose of the tax is to raise revenues and pay for highway maintenance. A flat fee does that simply and neatly.
      • 2 Months Ago
      Why tax EV's at all? Don't the many environmental, social, economic, public health, and homeland security benefits offered by EVs far outweigh the cost of their use of roadways? Here's my idea: make up for the lack of gasoline taxes on EVs by establishing provision that the corresponding lack of roadway revenue may be taken from the state's general treasury based on the amount of EVs registered in the state, and the state should get a certain amount of matching funds from the federal government based on the number of EVs registered in the state.
        • 2 Months Ago
        Where does the federal government get this matching money? I think using the odometer is the beat way to go for EVs. You can estimate how much you drive per year and pay a quarterly tax. File your return and either get back money, or pay more. EVs do use the road so should pay for road use as every vehicle does. While I consider myself a Libertarian when it comes to taxes I think a CO2 tax makes the most sense if "saving the planet" is your goal. I do however think it is too early to start talking about taxing a vehicle that makes up less than 1% of the market. Unless of course you are a politician when it is never too early to start a new tax.
      • 2 Months Ago
      I agree with the others. It's a bit too early to tax EVs (esp in this unfair way where the Volt doesn't have to pay the tax just because there is an ICE onboard). They aren't even on the roads yet! Let EVs start to gain some significant market share (doesn't even have to be huge, at least 5% like hybrids), then start figuring in taxes. Right now the state is just introducing disincentives (great negative material for the anti-EV guys) before the cars even have a chance on the market.

      As for a fair tax scheme, I like the idea of the year end mileage logging (similar to a smog check). GPS is definitely no go, no one wants to give the government ability to track where you are going (the system might be designed not to report location, but it still gives them the ability to track you with only software changes).
      • 2 Months Ago
      The capacity of tax collectors to perfect new methods of enforced stealing has never been plumbed. Keeping the victim sedated and quiescent, is the real problem.

      I'm sure methods wil be found to finance roads. The genuine problem is to find ways ot ensure the moneys extracted actually get spent on roads, that is the real issue.

      I'm afraid the conventional wisdom of these people were rudely awakend with the collapse of the Global Warming tax and power grab.

      They will be in for a further shock after mid decade as the artificail Oil Prices hover and then collapse to the real marginal cost of production and profit, for the first time in 45 years. I agree there maybe a price spike between then and now, but that will be the dying wail of the OPECBird doomed to extinction within the decade.

      The Peakist cassandras created a concern that so-called 'normal' oil was in danger of becoming unable to meet rising demand. They stopped looking, as lots of unconventional oil was discovered, methods were found and proved to recover it, and then were added to the supply under the artificial price umbrella of OPEC. Further all the oil markets have died, or entered severe decline, one by one, over the 40 year Interegnum of OPEC ascendancy, as substitutes were found and employed, except one.

      Now only one remains... Transportation. And the conditions are set to see that capped and then decline, in spite of rising BRIC consumption.
      • 2 Months Ago
      First, lets spend the money we collect on a local, state and federal level on the roads. After all, do you know how much is collected in your state vs what is spent on roads, not public transit or for bike lanes etc but on roads? In Illinois the governor has the power to divert road funds any way he sees fit. Our governor has taken $500 million/yr for the last 4 years and used it for his health programs. That is 25% of the total. Forget any new taxes until all levels of goverment can prove on an ongoing basis they are spending the money and doing so wisely.
      • 2 Months Ago
      I live in Washington. Know body knows where the amount of the flat tax came from other than it is a nice round number. It certainly doesn't take into account the amount of driving for many EV's is less than petroleum powered vehicles. The gas tax which this was conceived to replace was fair. You drive more you pay more. Your big heavy car that accelerates road deterioration used more fuel thus paid more taxes.

      A much better and fairer scheme has to be developed. I'm not saying EV drivers should get out of their fair share of road maintenance taxes. If my neighbor makes the same 7 mile commute in a car the same size as mine pays less tax than me just because I choose to drive green is not fair and a definite push in the wrong direction.
        • 2 Months Ago
        In respect of the wear caused to roads, the tax has never been fair.
        Wear rises exponentially with axle weight, with a lorry causing ~10,000 times as much wear as a car.
        Correct taxation of course did not suit the carmakers, as most freight would have stayed on the railways, and so the difference is largely ignored.
        If oil is short then hopefully a lot of freight will switch back to rail, and roads will last a lot longer.
        In an oil short world though, asphalt is likely to be more expensive, and so we should expect more gravel roads.
        • 2 Months Ago
        David Martin

        Or roads constructed from concrete. Newer concrete formulations are actually capable of cleaning the air.

        http://txactive.us/images/concrete_international.pdf

        • 2 Months Ago
        Randy:
        Not all vehicles pay their way in road maintenence cost. As we can see the difference in road deterioration between highway's number 3 and 4 lane caused by heavy tractor trailers and the almost pot-holeless number 1 and 2 lane traversed principally by passenger vehicles, it is passenger car owners paying most of the road repair cost for the trucking company owners. Life ain't fair but that's the fact.
      • 2 Months Ago
      I'm in favor of a per-mile tax, but I don't like the idea of being tracked by GPS - sure we've got OnStar and other services that already track you, but...

      Why not just have the odometer checked yearly, and then pay tax based on that? Submit it with your income tax documents.

      We already do basically the same thing for people who claim a mileage deduction (traveling for business use) - they state how many miles they've logged and then they deduct what they are allowed. Honestly, at 55 cents per mile, my boss makes money by driving to work.

      http://www.irs.gov/newsroom/article/0,,id=200505,00.html

      /generally, our tax system is all screwed up
        • 2 Months Ago
        Agreed. No reason we need to be tracked via GPS for this purpose.
        • 2 Months Ago
        Agreed, but have the odometer checked and the fee paid with the annual vehicle license renewal, not the income tax - there is enough hassle with the April 15th deadline, we wouldn't want everyone lined up to have their odometer checked at the same day. :License renewals are spread out over an entire year, making for less congestion at the DMV.

        One other thing - have that "mileage tax" applied to all cars, not just EVs, that way the tax rate can be kept low (1/10 cent per mile would be fine to start) and the economic advantage of electricity remains.
        • 2 Months Ago
        "One other thing - have that "mileage tax" applied to all cars, not just EVs, that way the tax rate can be kept low (1/10 cent per mile would be fine to start) and the economic advantage of electricity remains."

        Agreed, Chris M.

        I thought it went without saying that any vehicle tax should be implemented regardless of drive train type.
        • 2 Months Ago
        ""Im in favor of a per-mile tax, but I don't like the idea of being tracked by GPS - sure we've got OnStar and other services that already track you, but...

        Why not just have the odometer checked yearly, and then pay tax based on that? Submit it with your income tax documents. ""
        ------------------------------------------------------------------------------------------------------------
        Someone later says "post 13 is the first good answer" well, no it isn't. You are "in favor of a per mile tax"... that is called "a gas tax". the more you drive, the more you pay. You drive a big suv for 'safety' or status, or business calls, and I can't see around you or you crush little gas saving people, THEN YOU PAY A GAS TAX FOR THAT, EACH MILE. And the thoughtful person, who drives a 35mpg Ford Focus only 6000 miles and rides the bus and bikes, pays much less "mileage" tax.

        How much does it cost to collect and administer a gas tax scheme? About as much as the price of the ink to write another 'zero' on each gas stations quarterly revenue form.
      • 2 Months Ago
      Why introduce a tax so early? Why not after a number of years? This will be used by detractors to say that EVs are not better on the pocket than ICEs.

      Also can anyone tell me why oil has hit $80 a barrel today in the middle of an economic down turn??????
        • 2 Months Ago
        Demand for oil is no longer overwhelmingly dependent on that of the US.
        BRIC, including importantly Chinese, and that in the oil exporters themselves is rising rapidly, whilst present fields decline at around 5% a year, so you have to run fast to stand still.
        BOA forecasts around $150/barrel by 2014:
        http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7266837/Barclays-and-Bank-of-America-see-looming-oil-crunch.html

        The IEA which is regarded as the premier body also comes up with a supply crunch at around the same time.
        SUV drivers are buying a pretty immobile piece of metal sculpture.
        • 2 Months Ago
        I agree that it is too early to need to resolve this issue. Especially since governments are trying to push EVs by offering incentives (up to $7000). Isn't the process of offering incentives only to tax only those who qualify redundant? (Also, I'm not economist, but isn't the process actually detrimental, as both cause deadweight loss?)
      • 2 Months Ago
      I am also against the idea of taxing EVs for at least until the time these reach some significant market share - i.e. 50% maybe -.

      To compensate for these I would even suggest to raise fossil fuel taxes.

      Everything should be done to transition faster to clean vehicles now that the technology is available, but still expensive.
      • 2 Months Ago
      I say you work with PGE, FirstEnergy, Ohio Edison, ect... to have specific EV meters installed in garages. These meters have the tax rate per KWh factored in. this way you get a bill that is itemized for your EV and the rest of your home. If you solar charge your car, you get off free. Aren't we all about incentivising off grid behavior? Why not allow those VERY small % of people not pay for road tax...maybe if enough jump onto the solar wagon then implement something...

      Then again even solar (if you charge the grid during the day) would pull during the night off the grid and have the ability to be charged the tax appropriately.

      Well that is my .02
        • 2 Months Ago
        Again WA state here had an answer, and dropped the ball. Folks, we don't need to call it a CO2 tailpipe emissions fee its a "gas and energy tax" I am and have been in favor of for years.

        Refereing to common sense, most EV's should and are charged at nite in the driveway. Yes, there is a problem if you park on the street.....But, the point is TIME OF USE METERS are common now. We had them here in WA for about a year or two. "The experiment failed" PSE said, and took out the hi-tech meters. I was disappointed my discount price for staying up late at night and doing laundry was 0.0561cent/kwhr at nite, and peak daytime fees were adjusted to 0.0623 I recall. How about PEAK ENERGY (since we no longer have PEAK OIL) be charged 25.0cents/kwhr! And conservative, or nighttime industries, or the poor on limited account be charge 0.03cent/kwhr, as I have mentioned here before, and everywhere I can.
      • 2 Months Ago
      This is a breakdown of the hidden state fees for an annual registration of an auto or non commercial truck in Cal. Most of the fees are set amounts or based on the age of the car/truck, in my case it works out to about 1.2% of the original purchase price annually. In Cali. most of these same fees would be charged no matter the power source. For a new car purchase add the sales tax of as much as 9% to the price depending on the county or city of purchase.

      State taxes on any vehicle fuel = 7% Sales Tax. 1.25% county tax. 1.2 ¢ per gal state UST fee. plus local sales tax, in addition to fed. excise taxes.

      In view of the current financial conditions, I would seen little possibility of there not being some kind of fuel source taxes on pure EV's or even hybrids in addition to the normal utility taxes for electricity.




      Current Registration:
      Current California Highway Patrol:
      Current Vehicle License Fee:
      Current County Service Authority for Freeway Emergencies Fee:
      Current Fingerprint ID Fee:
      Current Smog High Polluter Repair Fee:
      Original Smog Abatement:
      Alt Fuel/Tech Smog Fee:
      Current Auto Theft and/or DUI Crime Deterrence Program:
      Current Abandoned Vehicle Fee:
      Current Valley Air Quality:
      Alt Fuel/Tech Reg Fee:
      Reflectorized License Plate Fee:


        • 2 Months Ago
        As I've said, eliminate all the administration, paperwork, and fees for those up front costs, and replace them WITH A GAS TAX. So your collector car in a garage costs nothing, until you drive it. Same with a guy who owns 3 vehicles, you PAY BY THE MILE when you buy gas! And then, it won't be such an issue whether one drives at nite or at peak, it can only improve the status quo.
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