How do we pay for roads during the EV era?

T

Texas Niro EV

Active Member
One of my federal senators sent an email to me recently and mentioned the Motor Fuel Excise Tax. I did a little research on the Motor Fuel Excise Tax and it got me thinking about a lot of things. The Motor Fuel Excise Tax in Texas is $0.385 per gallon of which $0.20 goes to the state government and $0.185 goes to the federal government https://igentax.com/gas-tax-state/.

The Texas government is always complaining that road maintenance costs rising faster than the revenue from the Motor Fuel Excise Tax but $0.05 per gallon actually goes to pay for schools and Texas hasn't raised their Motor Fuel Excise Tax since 1991. Now the Texas government, including the senator I have been conversing with, is complaining that fuel efficient vehicles and reduced demand for gasoline is driving down revenues from the Motor Fuel Excise Tax even further. You can be sure that conservatives are going to use declining revenues from the Motor Fuel Excise Tax as one of the main arguments for opposing electric vehicle adoption.

I told my senator that I think the Motor Fuel Excise Tax is an obsolete method of acquiring revenue for road maintenance. I told him that a vehicle usage tax based on mileage makes a lot more sense in the EV era. I know that some states are already experimenting with vehicle usage taxes and I know of at least one study being performed.

Conservatives have been complaining about paying for the electric vehicle infrastructure in the American Jobs Plan but they fail to mention how obsolete the Motor Fuel Excise Tax already is. One of the best ways to pay for the electric vehicle infrastructure in the American Jobs Plan may be to completely overhaul the Motor Fuel Excise Tax to a vehicle usage tax based on millage and linked to the Consumer Price Index. When I consider how the Motor Fuel Excise Tax appears to be so mismanaged, it really heats up my blood when I hear conservatives complaining about paying for electric vehicle infrastructure.

I just wanted to do a little math to give an idea of what an acceptable usage tax based on mileage might be. A car that travels 12,000 miles a year and gets an average of 40 mpg burns about 300 gallons of gasoline per year. At $0.385 per gallon that person pays $115.50 of Motor Fuel Excise Tax per year.

Dividing the $115.50 by 12,000 miles gives a usage tax rate of $0.009625 per mile. This is of course based on a light duty vehicle. The usage tax rate would be adjusted based on vehicle weight class.
 
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In Ontario Canada when the vehicle registration is renewed annually one of the required check boxes is to enter the current mileage. So a mileage tax could be collected this way. The problem with it is that lots of folks with subsistence incomes might not have the money to pony up at renewal time. I still insist that road maintenance should be a line item in the overall budget of the government whose jurisdiction the road falls under. By all means continue to collect some taxes from fuel as heavier high usage vehicles break down the roads more.

Tax has been made into a dirty word in many people's minds but you can't have a great country with good infrastructure without taxes. You can have a modern country with excellent road & transportation systems, health care for all, good public education from kindergarten to post secondary, OR you can have low taxes and live in a declining 3rd world type of state where a select few live very well but a the majority live lives of grinding poverty and occasionally get the crap beat out of them if not killed outright by corrupt cops. Pick your poison.

The other economic benefit of EVs is mostly overlooked in non petro states. The EV is powered by locally produced energy so more of the money stays close to home. The benefit to the health of the general population not having to breath in particulates produced by combustion engines is impossible to measure but would probably be quite significant. Imagine our cities relieved of the stink and noise of diesel engines. Would this make them more viable for better health and incomes?

What I'm driving at here is that a road tax is a simplistic solution inadequate for a more complex infrastructure situation. And please, these are ideas to batt around and not fodder to provoke an idealogical food fight.
 
marshall said:
While I agree that everyone should pay their fair share, I issue is how do you collect the funds as cheaply and effectively as paying at the pump?

So what is your plan to collect the funds?
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Right. It’s either the honesty system (good luck) or automated car reporting to the cloud (good luck).

Our utility is experimenting with connected EVSEs, so they can track how much you charge your car and offer different rates. Again, that would be a lot of infrastructure.

It all sounds good for mileage based, but I haven’t heard an idea that works with current driver behaviors.
 
In the short term I would guess we will see increasing registration-based flat fees in the states. My state (SC) charges me $60 per year at registration time as a "road use fee" for my EV. I estimated my yearly gas use from my ICE and it came out pretty close to $65 in gas tax paid in 2019. So for my use case, that is pretty equitable.

I think down the road, as most EVs are internet connected, the fees could switch over to a mileage-based system along with a weight class consideration.
 
marshall said:
While I agree that everyone should pay their fair share, I issue is how do you collect the funds as cheaply and effectively as paying at the pump?

So what is your plan to collect the funds?
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In theory the process is quite simple (at least for Texas). Vehicle inspection in Texas are already linked directly to the Department of Public Safety so, when you pay your registration fees every year, the Department of Public Safety already knows whether your vehicle passed inspection. The mileage information is already on the inspection reports so the mileage information that can be used for excise tax purposes is already available to the Department of Public Safety.

Paul K said:
The problem with it is that lots of folks with subsistence incomes might not have the money to pony up at renewal time.
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That's not really a problem the states worry about. The states worry about whether they are going to get their tax revenue. The problem you are talking about is really not much different than if a vehicle owner can't afford vehicle insurance, inspection fees and registration fees because they are all required before a car can legally be placed on the highways.

The key phrase here is that the fees are required BEFORE the car can be placed on the highway. You can't do BEFORE with a vehicle mileage excise tax if the mileage isn't accessed until the beginning of the following registration year. Some people have suggested that you prepay your vehicle mileage excise tax the first year based on expected average vehicle mileage and then have vehicle mileage excise tax adjusted on subsequent years.

As I identified above, a mileage based vehicle excise tax probably wouldn't be very high compared to most peoples incomes. If someone does have a very low income they would probably buy a small car that doesn't require a large mileage based vehicle excise tax. There could also be programs like the mileage based vehicle excise tax being waved for people with very low incomes.

Corruption and cheating can happen anytime the government imposes a tax but, at least in the USA, corruption and cheating is usually on a small scale and it impacts a very small number of people. I would suspect that the vast majority of people in the USA would see the benefits of a mileage based vehicle excise tax and would be perfectly willing and able to pay it. The biggest problem I see to a mileage based vehicle excise tax is the politicians being stuck in the past and reluctant to change.
 
LOL, I just find it amazing how willing people are to find new ways to pay more taxes. Shouldn't it be how we can promote more EV adoption??

Instead of blowing most your new spending on non-productive initiatives, why not use some of it for infrastructure? I mean real infrastructure like roads, bridges, etc. The cost for that is a very tiny fraction of the new spending.
 
Texas Niro EV said:
That's not really a problem the states worry about. The states worry about whether they are going to get their tax revenue. The problem you are talking about is really not much different than if a vehicle owner can't afford vehicle insurance, inspection fees and registration fees because they are all required before a car can legally be placed on the highways.
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I do think at least some at the state and local level do worry about such things.

Folks do drive with no or expired licenses, no insurance and at times drive without inspection and registration fees. I carry uninsured/under-insured vehicle insurance due to this happening. Enforce is expensive and carries it's own set of negatives, including jail time in some states for nonpayment of fines.

I don't have an answer that works better than pay at the pump. Thanks for your thoughts on this issue.
 
R P said:
LOL, I just find it amazing how willing people are to find new ways to pay more taxes. Shouldn't it be how we can promote more EV adoption??
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EV owners need to pay their fair share RP.

The state of Washington just passed a law and is waiting for the governor to sign it requiring all light duty vehicles be electric no later than 2030. That will do more to promote electric cars than all the rebates or tax incentives put together.
 
marshall said:
EV owners need to pay their fair share RP.

The state of Washington just passed a law and is waiting for the governor to sign it requiring all light duty vehicles be electric no later than 2030. That will do more to promote electric cars than all the rebates or tax incentives put together.
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Like I said, road infrastructure (this thread topic) spending is a very tiny fraction of your total govt spending. Why not use some of the money you have for that?

And what assurances are you going to have that a road tax will be used to maintain roads? If you are going to to that, at the least you should have some kind of road maintenance bank set up, so that money can only be used for roads and nothing else.

In Canada, we are very familiar with gasoline and carbon taxes. But have not seen much of that go towards roads and bridges. Same with property taxes. They keep building houses and condos like crazy everywhere, but don't upgrade the transportation infrastructure. And when they start, takes them 5 years of construction to add a lane to a freeway, and then it is full again, and the planning starts again to add another one in the next 5 years. The endless construction means that you never get to enjoy the benefits of the previous upgrade!! They are clearly short of money, and try to stretch it out as long as possible all the time. And any upgrade costs a fortune the way they do it now. It's like they are using gold in the pavement!!

In the old days (30 years ago), they could build a brand new major highway (eg our Coquihalla Hwy) in just a few years at a fraction of the recent project cost here to add a few lanes and replacement bridge (Port Mannn) to our major freeway in and out of Vancouver.

Living in WA, I am sure you have been up here, so you know how bad our road infrastructure is.
 
R P said:
LOL, I just find it amazing how willing people are to find new ways to pay more taxes. Shouldn't it be how we can promote more EV adoption??

Instead of blowing most your new spending on non-productive initiatives, why not use some of it for infrastructure? I mean real infrastructure like roads, bridges, etc. The cost for that is a very tiny fraction of the new spending.
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Nobody is talking about "new ways to pay more taxes". What we are talking about is replacing revenues lost when there is no fuel sold anymore to collect Motor Fuel Excise Tax on. Taxes tend to be a very complicated issue and it's very hard to earmark any particular tax.

$0.05 per gallon of gasoline sold in Texas goes to financing the public education system, would you want to be the one that takes this money away from public education? It's also not true that EV owners and operators don't pay any usage taxes because we pay sales taxes for the electricity at home and at public chargers. The Texas Motor Fuel Excise Tax has stayed at $0.20 for the last thirty years, since 1991, do you think the thirty year old $0.20 Texas Motor Fuel Excise Tax is still relevant to the modern transportation infrastructure?

We just don't want conservatives to use the arguing point against electric vehicles that we don't pay our fair share.
 
I saw on another thread a discussion about tracking vehicle kWh to pay for roads. Although this makes great sense I think in all practicality it would be impossible to do both politically and technically. Even though we mentioned previously that the mileage is routinely recorded during vehicle inspections, measuring and recording kWh consumption is not something inspection technicians are trained to perform.

You would have to access the telemetry of the vehicles to get that information. Just the political hurdles alone of implementing a process that would routinely access vehicle telemetry information seams insurmountable. No, using vehicle kWh to calculation vehicle usage excise tax does not seem practical.

Restructuring taxes on electricity consumption to pay for road construction on the other hand does make a lot of sense. As EV usage goes up so will electricity consumption. Increased electricity consumption has always paid for electricity grid upgrades and would continue to do so as EVs drive up electricity consumption, so why not use electricity consumption pay for the roads that those EVs travel on as well?

What you would have to calculation is how much electricity consumption needs to pay for road maintenance construction. At first it would be a pretty easy calculation, you just calculation how much Motor Fuel Excise Tax you are losing because of electric vehicles on the road and add this to existing electricity taxes for all electricity consumed. After EVs have fully taken over you just adjust the electricity tax as required to cover road maintenance and construction.

Using electricity consumption to pay for road maintenance and construction sounds like a win-win, not only do we gain a long term model to pay for road construction but the cost are distributed across all electricity consumers so no-one pays more than their fair share.
 
Texas Niro EV said:
Nobody is talking about "new ways to pay more taxes
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That clearly needs to be emphasized.

R P said:
what assurances are you going to have that a road tax will be used to maintain roads
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In Washington state we have a constitutional amendment. It's not perfect, but without it, I can certainly see leaks forming.

https://leg.wa.gov/JTC/trm/Documents/TRM_1315Update/6 - 18th Amendment.pdf

We also have the initiative process in Washington state if things get too far out of whack.
 
Remember that more and more highway spending comes from places other than user fees. On the federal level, that's mainly taxes and borrowing. On the state and local level, that's mainly property taxes, sales taxes, income taxes and the like.

In other words, you already have everybody paying for highways, and not based on how much they're using them. So to me, to say EVs or fuel efficient vehicles aren't paying their fair share is a red herring. Nobody's paying their fair share.

More generally, on the federal level at least, there's no real momentum to raise fuel taxes or find another way to increase user fees -- VMT or whatever. And current fuel taxes are worth less and less each year.

So really the idea of charging the people who use roads for the right to use those roads is on its way out, for better or worse.
 
TRSmith said:
Remember that more and more highway spending comes from places other than user fees. On the federal level, that's mainly taxes and borrowing. On the state and local level, that's mainly property taxes, sales taxes, income taxes and the like.

In other words, you already have everybody paying for highways, and not based on how much they're using them. So to me, to say EVs or fuel efficient vehicles aren't paying their fair share is a red herring. Nobody's paying their fair share.

More generally, on the federal level at least, there's no real momentum to raise fuel taxes or find another way to increase user fees -- VMT or whatever. And current fuel taxes are worth less and less each year.

So really the idea of charging the people who use roads for the right to use those roads is on its way out, for better or worse.
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This is a direct quote from Senator Roger Wicker as reported on Reuters talking about a Republican counter-proposal to the American Jobs Plan, "There may be an effort to make the electric cars pay their fair share, which they are not doing under the current gas tax". Although I agree with your sentiment to some extent it, appears that some and probably most members of congress do not, especially when it comes to electric vehicles. Senator Wicker's comments represent the kind of conservative attack on electric vehicles that everyone interested in promoting electric vehicles needs to be concerned with.
 
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