Consumer Reports on EV tax/fees

bwilson4web

bwilson4web

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My apologies as it was late and I've been successfully working on my SR+ Model 3. Per suggestions, the bold and italics are 'proposed' from the article. Personally I would have preferred to digitize the report but not wanting to cause a copyright fracas, did a hurried report:

The February 2020, Consumer Reports, has a map showing excessive EV fees by state, pp. 14. Alabama is listed at 80% excess (i.e., nearly twice as much.) The States listed and their EXCESS tax/fees:
  • 191% - Arizona
  • 185% - Missouri
  • 142% - Texas
  • 132% - Arkansas
  • 130% - Wyoming
  • 112% - Minnesota
  • 100% - Mississippi
  • 80% - Alabama
  • 74% - Oklahoma
  • 61% - North Carolina
  • 48% - Georgia
  • 45% - North Dakota
  • 37% - West Virgina
  • 37% - Washington
  • 36% - Ohio
  • 21% - Idaho
  • <20% - Kansas, Missouri, Pennsylvania, New Hampshire
IMHO, carry a copy of this article and give it to any politician soliciting votes and donations with the comment,"Your donation was given to the Dept. of Revenue."

BACKGROUND: Proposed by the American Legislative Exchange Council (ALEC), this excessive tax/fee is equivalent to a 'hippy' tax. Like the old 1960s legislation that sought to ban clothing made out an American flag worn by long haired and bearded, it is aimed at EV owners alone and often passed with State gas tax increases (at least in Alabama.)

Source: https://whnt.com/2019/03/13/rebuild-alabama-act-adds-new-registration-fee-for-ev-and-hybrid-drivers/

Whitt isn't pleased with the brand new $200 annual registration fee on EVs, $100 for hybrids, that will start next year. It will then increase by $3 every four years starting in 2023.​

So let's work the problem backwards from an 18% Alabama gas tax that we had last year:
  • $200 / 18% = $1,111.11 of gasoline not bought by this EV owner
  • $1,111.11 / $2.22 (gas buddy) = 500.5 gallons of regular
  • 16,532 miles in 10 months ~= 19,846 miles projected first year of SR+ Model 3 ownership
  • approximately 20,000 miles / 500 gallons ~= 40 MPG tax equivalent
Now I'm retired but even when working, 20k miles per year was common in our Prius. We could afford a mobile lifestyle because the Prius got 52-58 MPG.

So what would a 'fair tax' be?
  • wheel count - every wheel costs $25 including trailers
    • $50 motorcycles
    • $100 ordinary cars and pickups
    • $150 dual-wheeled pickups and delivery vans
    • $50 light duty trailers
    • $100 dual-wheeled trailers
    • $150 RVs
  • eliminate or greatly reduce the gas tax, everyone has a farm equipment fuel tax
    • a fuel tax of say 5-9% would increase 'out of State' buyers to fund our roads
So how am I dealing with it? Make more miles!!

Our EVs cost 1/3 per mile lower than an efficient Prius and closer to 1/5th per mile cheaper than the 'white collar cowboys' driving ego-mobile pickups. You know the ones without a scratch, spec of mud, and perfect chromed tow ball sitting on oversized, knobby tires. If I go from 20k miles per year to 40k miles per year, the tax equivalent becomes 80 MPG.

Bob Wilson
 
@bwilson4web I think we have had other threads on this subject. The contra argument that proponents use is that EVs (especially BEVs) use the same roads and traffic infrastructure, and the same public services (police, emergency services) as ICE users. A part of this infrastructure and services are paid for by gas taxes and if you do not consume gas, then ICE users are subsidizing EV users (especially BEV as there is no gas consumption). In addition, there may be other services used by everyone that are paid for by gas taxes, and EV users are not paying their fair share.

On the face of it, this is not unreasonable. The devil is in the details. The truth is not all of the gas taxes go for shared infrastructure and services. Critics claim some of the gas taxes are being used to pay for other expenses including debt servicing and other wasteful expenses or expenses that should be paid for by other taxes (https://www.wsj.com/articles/states-siphon-gas-tax-for-other-uses-1405558382 ).

So I agree that there could be some legitimate taxes on EVs owners to pay for use shared infrastructure, but not anywhere close to what is being levied. However states think they can get away with it for the following reasons (there may be others)
  1. EV owners are more affluent and can afford it
  2. EV owners are minority of vehicle drivers and hence have less ability to make noise or protest
  3. The fairness argument will resonate among the voters of their state, who may be skeptical of EVs and climate change
  4. Repaying the oil and other lobbies for their support on other issues

Unless there is a public outcry or there are legislators who strongly believe in EV usage, this is not going to change.
 
bwilson4web said:
The February 2020, Consumer Reports, has a map showing excessive EV fees by state, pp. 14. Alabama is listed at 80% excess (i.e., nearly twice as much.)
Click to expand...
Thanks for reporting this.

Did Consumer Reports include the federal 18.4 cent tax, at least 60% of which goes back to the states for highway maintenance? I don't see that in your computation. And I believe Alabama's tax just went up 6 cents.

There are a lot of ways to cast this, but for me the basic issue is budgeting. Every EV takes road maintenance funds away from the state budget. Subsidizing EVs is good public policy, and there are plenty of programs that do that. But as more EVs get on the road, either the state highway departments will have to keep fighting for more general fund dollars, or build in something like this fee once and for all.
 
Toolworker said:
Did Consumer Reports include the federal 18.4 cent tax, at least 60% of which goes back to the states for highway maintenance?
Click to expand...
Nothing on the Federal fuel tax.
Toolworker said:
There are a lot of ways to cast this, but for me the basic issue is budgeting. . . .
Click to expand...
My point of view is if increasing the EV annual fee compensates for the 'lost' gas taxes, make it the universal solution. Everyone pays the same fix fee, scaled by the number of wheels. Then eliminate the gasoline tax.

Bob Wilson
 
interestedinEV said:
The contra argument that proponents use is that EVs (especially BEVs) use the same roads and traffic infrastructure, and the same public services (police, emergency services) as ICE users. A part of this infrastructure and services are paid for by gas taxes and if you do not consume gas, then ICE users are subsidizing EV users (especially BEV as there is no gas consumption). In addition, there may be other services used by everyone that are paid for by gas taxes, and EV users are not paying their fair share.
Click to expand...

I think that's a reasonable argument. As you say, EVs use the same roads, bridges, and traffic infrastructure as gasmobiles do. Basing an EV tax on the amount of energy contained in fuel used by gasmobiles will result in seriously under-funding road construction and maintenance.

By my back-of-the-envelope calculations, the average road use fee for EVs should be about $200, for combined Federal, State, and local taxes, to replace gasoline tax revenue.

And as you also say, the devil is in the details. What's "fair"? Is it fair to charge someone who usually drives rather short distances as much as someone who drives long distances on a daily basis? Wouldn't it be more fair to charge a use fee based on the yearly odometer reading of the car? How much of a burden would it be to add an odometer reading to the annual renewal for auto registration and/or license plates?

It's a pretty big can of worms.
​
 
So what is being suggested is that I pay an extra registration fee on top of the taxes on my higher electricity bill?? Where I live, we also have to pay more (bumped up to higher tier rate) with additional electricity usage.

What incentive is there then to go EV? EV cars cost more, depreciate faster, and would cost me more to drive in the US on a long trip than taking my ICE car. And if they add on annual fees, that is just more salt into the wounds.

Right now my EV is only good for short trips and around town. Any long trips, will take my ICE car.
 
bwilson4web said:
Nothing on the Federal fuel tax.

My point of view is if increasing the EV annual fee compensates for the 'lost' gas taxes, make it the universal solution. Everyone pays the same fix fee, scaled by the number of wheels. Then eliminate the gasoline tax.
Click to expand...

Yeah, but the amount of wear on the road depends on the weight of the vehicle. Heavy trucks do the most damage - cars are a whole lot less. So the price should probably scale with the vehicle weight, not the number of wheels.
 
bwilson4web said:
Nothing on the Federal fuel tax.
Click to expand...
Then the computation is incomplete, because EVs deprive states of at least 60% of the Federal gas tax. I'm surprised Consumer Reports missed that.
My point of view is if increasing the EV annual fee compensates for the 'lost' gas taxes, make it the universal solution. Everyone pays the same fix fee, scaled by the number of wheels. Then eliminate the gasoline tax.

Bob Wilson
Click to expand...
What about vehicle weight? A Kona shouldn't pay as much tax as a Hummer.

There are a lot of ways to calculate a road tax, and all of them have inequities. My idea of an ideal fee - some day when all vehicles are connected - would be based on vehicle weight and number of miles driven.

Getting back to reality, what's in place is a Federal and state gas tax, and that's not likely to change. So the most equitable thing to do is to add something like the EV fees.
 
Toolworker said:
What about vehicle weight? A Kona shouldn't pay as much tax as a Hummer.
Click to expand...
I'm not terribly worried about that as counting wheels is straight forward. Even a civil servant should be able to handle that task. It also scales from motorcycles through multi-axle, dualies and should include every trailer. If it rolls on the road, taxed by wheel.

Bob Wilson
 
R P said:
So what is being suggested is that I pay an extra registration fee on top of the taxes on my higher electricity bill?? Where I live, we also have to pay more (bumped up to higher tier rate) with additional electricity usage.
Click to expand...

That is a good point. Here is how it is. Taxes on electricity are apportioned for some purposes (regulation of the utility, and federal, state and local services not for roads and bridges). Gas taxes go for other areas (regulation of the gas providers, and federal, state and local services, some of which are roads and bridges).

An intelligent government will be able to move funds from the increased electricity taxes to roads and bridges. It needs some more equipment and forward thinking.

Unfortunately governments do not work that way. Everything is looked in a very silo-ed way. They way they look at it is, and say "Oh great that @R P is paying more for electric taxes and some of those taxes are used to give subsidies to companies relocating to our state. So we now we have more money for this". Then they look at roads and bridges and say"Oh, @R P is not paying enough for roads and bridges, so let us sock him. We do not care what he payed elsewhere."

Welcome to reality.
 
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