Electric vehicle fees won’t fix the transportation funding gap

When you go to ARCO or Mobil and buy gas, you pay sales and gas taxes.  The money is supposed to go to fix the streets and freeways (at least the money not stolen by the Democrats and Newsom for the bike lanes, walk lanes, trains to nowhere and money losing government buses.  But when you charge your electric vehicle, no sales tax money is collected—and no gas tax money is collected—so these cars ride free on our streets and roads.

“There is a $1.1 trillion gap between the amount that government has committed to investing in transportation infrastructure and the amount needed to bring our infrastructure up to par. Many blame electric vehicles

They argue that because electric vehicles do not use gasoline, they are not paying gas taxes, which are the principal source of funding for transportation infrastructure. 

The proposed solution is imposing new electric vehicle fees, something  21 states have done, including California, where the fee will go into effect in 2020. The hope is that the fees will somehow compensate for electric vehicle owners not paying taxes at the pump. And now the federal government is considering following suit.

Maybe if Sacramento did not use your tax dollars to help the rich to buy $60,000 electric vehicles we would not have this problem.  California policy has been to help the rich avoid taxation and buy expensive cars.  What happened to the Democrats income inequality values?  In the end watch for an aggressive effort to add a new car tax—a mileage tax.  No they will not end the gas or sales tax, they will add this—more reason to flee the State while you can still do so financially.

Electric vehicle fees won’t fix the transportation funding gap

By Austin Brown and Dan Sperling, Special to CalMatters, 12/11/19 

Why are we allowing our roads, bridges, and other transportation assets to crumble? 

One out of every five miles of highway pavement is in poor condition, and 188 million cars travel across a structurally deficient bridge each day. 

There is a $1.1 trillion gap between the amount that government has committed to investing in transportation infrastructure and the amount needed to bring our infrastructure up to par. Many blame electric vehicles

They argue that because electric vehicles do not use gasoline, they are not paying gas taxes, which are the principal source of funding for transportation infrastructure. 

The proposed solution is imposing new electric vehicle fees, something  21 states have done, including California, where the fee will go into effect in 2020. The hope is that the fees will somehow compensate for electric vehicle owners not paying taxes at the pump. And now the federal government is considering following suit.

But the root of America’s transportation funding issues long predates and runs much deeper than electric vehicles. Multiple developments have contributed to our nation’s transportation funding deficit, including:

  • Stagnant taxation. The federal fuel tax and most state fuel taxes do not rise with inflation. (California is an exception.) Maintenance costs do rise. The result is steady erosion of our capacity to fund infrastructure improvements with fuel-tax revenue. Inflation has decreased the purchasing power of the federal fuel tax by more than 30% since 2000 and by more than 64% since 1993, the last time the federal tax was raised.
  • A focus on expansion over maintenance. Federal funding formulas tend to prioritize building and widening roads over taking care of roads we already have. The total lane miles of public roads has increased by 6% over the past two decades even as road quality has deteriorated.
  • Improved vehicle efficiency. Thanks largely to fuel-economy standards, vehicles are getting more efficient. The average on-road fuel economy for all vehicles has grown from 20 to 22.8 miles per gallon, or about 14%, since 2000. Less gas used means less tax paid.

Each of these factors contributes far more to our nation’s transportation funding deficit than electric vehicles, which currently account for only about 0.5% of vehicles in the United States. 

Over the past two decades, by contrast, we have added 6% more lane miles to maintain, built a national vehicle fleet that is 14% more efficient, and—most importantly—seen the purchasing power of fuel-tax revenue drop by more than 30%. 

It doesn’t take a deep analysis to appreciate the difference in scale. Electric vehicles are not responsible for more than a miniscule fraction of the funding gap at the federal level.

And at the state level, electric vehicles pay other taxes such as sales and registration fees that actually offset lost fuel-tax revenue, especially given high electric vehicle average purchase prices so far. Studies in Minnesota and California found that electric vehicles actually generate at least as much revenue (on a per-vehicle basis) for states as gas-powered vehicles do.

So how do we pay for our transportation system?

The first step in closing the transportation-funding gap is to index the federal gas tax to inflation. This is as close as it gets to a “no-brainer” in the policy world. We cannot hope to keep up with natural increases in cost if the primary mechanism we use to generate revenue is artificially fixed decades in the past. 

Such an update to the federal gas tax is hardly unprecedented: many state gas taxes are already inflation-indexed. The federal government should also consider indexing the federal gas tax to total fuel demand as well. This additional provision would ensure that gas-tax revenues remain constant even as vehicle efficiency increases, thereby addressing another long-term challenge to funding. 

In the longer term, as more drivers shift to electric vehicles, revenue from EVs will become increasingly important for transportation funding. The correct approach then will be to shift toward usage-based charges rather than flat annual fees for drivers. Policymakers could place a small tax on each mile traveled by a vehicle. 

Usage-based charges would distribute the cost burden for transportation infrastructure more fairly than flat fees by placing a greater share of the burden on those who account for a greater share of infrastructure use. 

Such charges also would help decrease congestion and emissions by creating a direct financial incentive for people to drive less. Indeed, a report from the Information Technology and Innovation Foundation found that “road user charges are the most viable and sustainable long-term ‘user pay’ option for the federal government.”

Imposing new fees on electric vehicles now could disrupt the momentum that is slowly building in the market for more efficient, sustainable vehicles.

UC Davis researchers found that imposing EV fees in California could reduce their sales by 10–24%. 

This is especially concerning given the expiration of tax credits for several manufacturers and the uncertain future of federal incentives in general. The result would be a small increase in transportation funding obtained at the expense of the substantial long-term benefits that electric vehicles deliver for individuals and for society.

The upshot is that imposing new fees won’t solve our transportation problems. It will only make them worse.

_____

Austin Brown is executive director of the Policy Institute for Energy, Environment, and the Economy, [email protected] Dan Sperling is director of the Institute of Transportation Studies at UC Davis, [email protected] They wrote this commentary for CalMatters.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. If in fact the states that were and or are heavily Democrat and have intentionally diverted funds from roads, highways, and freeway then there is no excuse for the massive gap. It may still exist but far smaller.

    There has been not only a diversion of funds (Newsom stating he is taking $6 Billion from the new gas tax supposed to fix the roads) is a lie to taxpayers so to is the composition changes for the road fixes. Did you know that the State of Calif. forced the reduction of oil in asphalt? Did you know that more then halves the life expectancy of roads costing taxpayers far more money?

    How about gasoline? Did you know the addition of alcohol reduces mileage? Did you know alcohol burns dirty increasing air pollution?

    Did you know that replacement of battery packs in hybrids or all electric are very expensive? Did you know that Lithium mined is toxic? Did you know Lithium batteries are dangerous and when unstable or broken open burn or explode? (so much for environmental anti car groups). Where is the technology to recycle this dangerous and toxic chemical?

    The Democrats have lied. The Democrats created false outcomes based upon suspect science. (fake science?)

    Did you know Tesla took Billions in tax breaks and then walked away from Calif.?

    There is more but space prohibits.

  2. “Really” is 110% correct. What he doesn’t mention is that China controls most of the World’s lithium either through its own mines or buying up mines around the World. And the fools keep screaming “RUSSIA, RUSSIA!”

  3. California already has legislation in place that adjusts gas taxes to inflation. It also collects enormous amounts of taxes, not enough of which go to fix roads and bridges. The constant focus on revenue and zero concern for how the revenue gets spent should start getting on residents’ nerves, but does it? And yes, “environmentally conscious” roads sprout potholes with even light rain, lithium batteries from the coming mandated EV’s will join plastic bottles as forever garbage, and control freaks in the guise of environmentalists will continue to get elected.

  4. There is no more common sense taught in our public schools anymore. Our society is getting dumbed down, and out of that gene pool come our new legislators. The only thing important to them is trails, and fun. No more fossil fuel. Social engineering where you don’t need to drive anymore, just live where you work like a good drone. Solve the crumbling roads by taking more cars off the roads, toll lanes for the elite, and bicycles for the peasants. The pyramid scheme will fail at some point, when there are more people on the dole than the workers paying the bill. Taxing the last few middle class workers to the point where it no longer pays to work is the end of the system. Too big to fail? We will see!

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