General Motors rocked the automotive world when the company recently announced that by 2035 it would only sell electric vehicles.
Eliminating gas powered cars might feel shocking but consider this — Tesla Motors overtook powerhouse Toyota as the world’s most valuable automaker and globally, 3.2 million electric vehicles were bought in 2020.
Utah lawmakers, meantime, are moving in the opposite direction, considering a plan to hike fees on hybrids and electric cars. Under the bill, annual registration fees would rise. Here are the details:
• Hybrid vehicles would go up from $20 to $50
• plug-in hybrids would jump from $52 to $260
• all-electric vehicles would go from $120 to $300
This would be the highest such fees in the nation.
The argument is that, because alternative-fuel vehicles don’t use as much (or any) gasoline, drivers aren’t paying their fair share when it comes to building and maintaining roads.
Gas tax revenues have indeed plummeted, but electric cars make up less than 2% of cars on the road. And these hefty new fees would generate just $6 million in 2023, meaningless in context of the Utah Department of Transportation’s $1.6 billion annual budget.
What’s driving gas tax revenues down? Fuel efficiency. The average new car gets about 25 miles per gallon, 25% higher than 16 years ago. A recent report from the governor’s budget office noted that the amount generated by the gas tax increased 55% between 2000 and 2018 while the expense to build and maintain roads increased 175%.
Utah isn’t alone in facing this new reality. Twenty-eight states, including Utah, have levy fees on plug-in hybrid and electric vehicles and 10 have taken steps to create programs that charge drivers of those cars for each mile traveled.
In Utah, these alternative-fuel drivers can pay the registration fees of between $20 and $120, or sign up for the Road Usage Charge program, which entails putting a tracker in the car and being charged 1.5 cents per mile (up to the normal registration fee).
About 3,200 Utahns opted for the tracker, according to program manager Tiffany Pocock. I’m one of them.
I joined because it seemed like a novel, reasonable approach, simpler than toll roads and more sustainable than the gas tax. It is, I believe, how we’ll pay for roads in the future.
Then COVID-19 hit and, like most people, I drove less — a lot less — usually about 500 miles a month, half of what I drove before. Even then, I pay $7.50 a month, meaning I don’t save money, I hit the cap and pay what I would have if I just paid the annual registration fee.
The Utah Taxpayers Association finds itself in the unusual position of supporting a tax increase, which this bill would be, no matter what they call it. The association argues that raising the registration fees would push people into the surcharge program since they could drive more miles (33,000 in a year for electric cars) and still not get to the base registration fee (remember it would jump from $120 to $300).
And that makes sense. It would be even more true if they made the fee, say, $5,000 a year or $25,000 a year. But does that make it fair? Does it serve the overall interests of the state?
The $300 fee seems to have been based on calculations by the Taxpayers Association. The group’s vice president, Rusty Cannon, justified the figure by taking the average miles driven, dividing it by the miles per gallon for an average car, then multiplying by the 49.4 cents per gallon state and federal gas tax.
The total was $381.36 meaning that, even with the new fee, electric vehicle drivers would still be getting a break, Cannon told a legislative committee recently.
Consumer Reports did a similar calculation with two key differences: It assumed the miles per gallon should be based on a newer, more efficient car and only used the state gas tax, not the federal. This is a better way to do it.
It doesn’t make sense to compare a new electric vehicle to the overall sample that includes old minivans and pickups, and the state should only be recouping state gas tax revenue.
The result was that the “maximum justifiable fee” for an electric vehicle in Utah would be less than $100.
So essentially the Utah Legislature wants to impose a fee that is triple the reasonably justifiable amount, a punitive amount that would create a substantial disincentive to purchasing cleaner vehicles — and would become even more skewed as gas vehicles become more efficient.
It’s the opposite approach we should be taking if we are serious about reducing air pollution and curbing climate change.
Make no mistake, the 100-year-old gas tax is running out of gas. There are solutions.
Max Baumhefner at the Natural Resource Defense Council proposed indexing the gas tax to a combination of fuel efficiency and inflation — so as the cost of roads increases and miles per gallon increases the tax would adjust accordingly. Then electric cars could be taxed at their miles per gallon equivalent, the amount of electricity that equals a gallon of gas. That’s simple and fair.
Or Utah could start charging by the mile for all cars, either by requiring trackers or based on odometer readings at the start and end of the year. Gas tax paid at the pump could be rebated (based on the average miles per gallon for the vehicle).
That oversimplifies a complex issue, though. Key details, like calculating the right mileage fee and deciding whether it should vary based on vehicle weight and pollution, will be critical and need to be worked out.
The Legislature has already directed the state’s transportation department to create recommendations for implementing a mileage surcharge for all vehicles by 2030. The report will likely come out in June, Pocock, with UDOT, said.
“There’s got to be another way to do it, but I think we’ve got to take the time to research and learn and do it right,” she said.
In the meantime, if we’re serious about curbing tailpipe emissions — the single biggest source of pollution — and cleaning our air, it would be a grave mistake to put the nation’s most onerous tax on a solution to that problem.