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Are electric car owners really costing states gas tax revenue?
Posted on March 26, 2020 by Charles Morris
For the past couple of years, US states have gone on an EV-taxing kick—many states have instituted or increased annual taxes on EV ownership, including otherwise EV-friendly states such as Oregon and Washington. Advocates of the tax increases consistently argue that they’re needed to make up for a growing shortfall in gas tax revenues (such arguments are disingenuous at best, as I explained in an earlier article).
In a recent article published on LinkedIn, Joy Kramer points out that, in several ways, EV owners contribute more to state revenues than legacy vehicle owners, not less.
Prior to 2015, Georgia was one of the fastest-growing EV markets in the country. However, as Ms. Kramer writes, “Legislators were so upset about the ever-growing population of electric vehicles…that they wiped away the state vehicle tax credit and tacked on a $200 annual EV user fee.” (The annual fee is now $213 for private vehicles, and $319 for commercial vehicles, plus a special tag fee of $35.)
Kramer cites data from the DOE’s Alternative Fuels Data Center to show that an average passenger vehicle is driven 11,244 miles per year, consuming about $470 worth of fuel annually, which would translate to $122 in Georgia gasoline tax. The $248 paid by an EV owner is a little over double that amount.
However, EVs generate income for the state in several other ways. An EV driving the average number of miles in a year would pay $19 in state sales tax on the electricity used. New EVs also generate more revenue from the state’s Title Ad Valorem Tax (TAVT) because of their higher upfront costs. For example, a base Nissan LEAF costs $31,600, compared to $23,170 for a Ford Fusion, so at the TAVT rate of 6.6%, the LEAF buyer would add an additional $556 to the Peach State’s coffers.
Ms. Kramer also points out that dinosaur drivers are buying non-locally produced fuel. At $2.00 per gallon, Georgia drivers are spending over $11 billion per year on gas, and 87% of that goes to out-of-state fuel producers. If more drivers would switch to powering their cars on Georgia-produced electricity, more of that money would stay in the state—and so would the taxes collected on the gas or electricity consumed.