To tax or not to tax? That is the question weighing on lawmakers’ minds as many states continue to consider legislation that would require drivers of hybrid and electric cars to pay an additional fee to compensate for the gasoline taxes they’re not subjected to.
The increase of U.S. sales of electric and hybrid cars has brought with it a decline in state and local gas-tax revenue that is used to pay for local highway and bridge maintenance. According to data from the Institute on Taxation and Economic Policy, state and local gas-tax revenue has declined every year since 2004.
And certain critics believe these hybrid drivers should be responsible for paying their fair share for the upkeep of roads they’re still driving on. Automotive News quotes Arizona state Senator Steve Farley, a Democrat from Tucson who wrote a bill to tax electric cars. He explains, “The intent is that people who use the roads pay for them. Just because we have somebody who is getting out of doing it because they have an alternative form of fuel, that doesn’t mean they shouldn’t pay for the roads.”
And the number of people “getting out of doing it” is only on the rise. Auto sales for electric, hybrid, and plug-in hybrid vehicles have increased almost 60 percent in 2012 from the preceding year, affording their drivers a “free ride” as New Jersey Senator Jim Whelan sees it. He contends that it is unfair that the 98 percent of people in his state who drive gas-powered vehicles are responsible for contributing to the “transportation trust fund” while the other 2 percent are not. He has proposed a $50 annual feel on electric and compressed natural-gas cars that would be deposited into the state fund for road and bridge maintenance.
But opponents to this tax contend that such policies contradict everything the government has said about renewable energy and clean and efficient technologies, arguing that this kind of legislation punishes people who are helping improve fuel economy and reduce greenhouse-gas emissions.
Others also argue that it’s unfair to single out hybrids for the additional tax. Tom Stricker, vice president of technical and regulatory affairs at Toyota Motor North America (NYSE:TM) explains, “A compact gasoline car may consume less fuel and pay less gasoline tax than a hybrid SUV, but only the hybrid SUV would be subject to an additional tax.”
Some U.S. states have proceeded with the legislation regardless. Automotive News reports that electric-car owners in Washington state began paying a $100 annual fee this year, and Virginia approved a $64 annual fee in April. Other states considering similar measures include Arizona, Texas, Indiana, and North Carolina.
Should Elon Musk be worried? Widespread approval of such a tax could prove to be devastating to Tesla Motors (NASDAQ:TSLA), a company that prides itself on eventually being able to ship its drivers all across the United States with its Model S using only Superchargers. The cost of energy per kilowatt hour for the Tesla Model S is $0.11, compared to the national average for gasoline at $3.80 per gallon. But nobody mentioned anything about a Supercharger tax…
Don’t Miss: Will Plug-In Vehicles Win the Long Game?