Fixing America’s roads and highways costs money. Taxing American motorists has long been the standard way to raise the cash for such efforts.
But electric vehicles have so far been exempt from such fees. Now, the Trump administration’s budget reconciliation bill proposes a new solution: a $250 annual registration fee for EVs and $100 for hybrids, to help fund road repairs and pay for ambitious tax cuts.
The fee is part of the Trump administration’s broader agenda to dismantle Biden-era climate policy . Those moves include eliminating the federal EV tax credit, slash incentives for clean energy manufacturing and overturning California’s emissions standards, which have been adopted by several other states to make America’s air more breathable.
But going after EVs with a specific tax may be the strangest move of all.
A Washington Post column explained on Monday that there’s simply no legal precedent for a retroactive tax of this type since the dawn of the 19th century. There’s no other consumer product in America that gets taxed like this simply for existing, years after purchase, with no link to usage or value. Imagine buying a TV or refrigerator and being told five years later to start paying $250 simply to own it, for example.
Worse still, the fee applies retroactively, hitting people who purchased EVs years ago. While gas taxes are paid at the pump when fuel is consumed, this fee is charged simply for owning an EV, even one sitting idle in a garage. So owners who drive less will be disproportionately affected.
Experts agree that EV owners should contribute their fair share towards road repairs. But they also warn that this flat fee is disproportionately high and could deal a major blow to households that live paycheck-to-paycheck.
The federal gas tax has remained stuck at 18.4 cents per gallon since 1993. According to Consumer Reports, the average gas driver pays roughly $100 per year, depending on fuel efficiency and miles driven. Under this proposal, EV owners would pay more than twice that regardless of how much they drive or how much their car is worth.
The Post draws a parallel to George Washington’s Carriage Tax of the late 1700s, which was the nation’s first federal wealth tax. The tax was levied on horse-drawn carriages, which were then considered symbols of extreme wealth. Washington viewed it as a tool to reduce inequality, and as NPR has detailed in a podcast, the tax was controversial even then.
“Victoria” electric cab driving past the White House in 1905.
Photo by: Public Domain
“Opponents see it as a stunning example of federal overreach,” The Washington Post report states. “As a lawmaker, you always know you’re blazing a trail to the future when you’re relying on laws about carriages.”
Fast forward 235 years, and the modern EV is no torchbearer of extreme wealth like the carriage was in the 18th century. Sure, the purchase price of the average EV is indeed higher than its gas-powered counterpart. But prices are coming down steadily. Battery prices are declining, used EVs are cheaper than ever and if you go the leasing or financing route, EVs are far more palatable than gas cars. They may have once been exotic spaceships for the wealthy, but that’s less true as time goes on.
Yet, some lawmakers are doubling down on this fee. Republican Sen. Bernie Moreno has even proposed to double the EV fee to $500. (It’d even go up to $250 for hybrids.)
The fees are “punitive taxes designed to confiscate fuel savings from consumers who just want to save money for their families,” Chris Harto, the senior policy analyst at Consumer Reports, said in a statement as the organization urged Congress to rethink its tax plans.
On top of that, most states already charge annual EV fees. New Jersey imposes a $250 fee; if the federal fee passes, owners there would pay $500 annually. California adds a $100 road improvement fee and Georgia drivers pay $211 for non-commercial plug-in vehicles. That makes a $250 federal surcharge even more onerous for electric drivers.
Even if this tax is passed in Congress, it won’t fix the real problem: the Highway Trust Fund is in crisis because the gas tax hasn’t budged in over 30 years. That’s the root issue. And punishing EV owners to patch that fiscal hole misses the point and sends the wrong message about EVs, which have very clearly demonstrated benefits for your wallet and for the climate.
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