Electric Vehicles and Fuel Taxes

I thought about posting in the Electric Vehicles thread, but this is a political slant so I decided to start a new thread rather than sully that one.

States are starting to feel the pinch of dropping fuel tax revenue due to the rise in popularity of EV’s and hybrids. The question is how they should handle it.

As fuel taxes plummet, states weigh charging by the mile instead of the tank | AP News?

Some states are exploring mileage based user fees so that EV’s don’t get a “free ride”. CO recently added a 27 cent package fee for home deliveries to help cover transportation projects. Other states are exploring electronic tolling.

I do not like mileage based fees for passenger cars. They would likely involve some sort of government intrusion in personal vehicle usage, and do not consider the negative externalities caused by increased emissions per mile. Even worse, they don’t get at the real cost driver of road maintenance: heavy vehicles. Private passenger vehicles cause minimal road damage. It’s almost completely caused by trucks, and the heavier the truck the greater the damage. Private passenger vehicles should pay towards road improvements of course, but that can likely be accomplished through existing annual registration fees or other existing tax mechanisms

I’m fine with vehicle registration fees, fees for package deliveries, and heavy taxes on diesel used in trucks to cover their share of roadway damage. Leave PPA mileage out of it please. If/when we see a big move to electric semi trucks, I imagine these will generally be equipped with telematics so capturing their mileage would be more straight forward and not intrusive in terms of personal usage.

First: Taxes need to be directly used for the impact on society, such as road maintenance or environmental damage. Any taxes that just go to the general funding of the government are bullshit.

Good(?) taxes:

  1. Axle or tire taxes for road maintenance based on weight of the vehicle fully loaded are easy to administer and good approximations for damage/usage to the road.
  2. Gas per gallon taxes to fund environmental remediation due to burning gas makes sense. The exact impact might be hard to measure but a rough estimate is better than no remediation.
  3. The technology is already present in new vehicles to track mileage. Taxing mileage directly associates the tax with the usage which I like. Almost all usage of a vehicle is on the public roadway, I don’t consider the intrusion much worse than a toll booth.
  4. If you really want intrusion (I do not) add GPS to the mileage tracker so taxes could be better allocated to each section of road used.

So . . . the local brothels are gonna get the best roads in town?


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One alternative would be to surcharge electric bills. Obviously not all electric usage is going to be for vehicles but once electric vehicles become the norm this would seem pretty fair. Maybe there could be a provision to rebate the road charges for customers without electric vehicles.

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This post is just perfect. A perfect post.

Well OK, maybe not, but certainly not a criminal post. My only nit-pick is that “no general funding” could be construed to mean all govt is fee-for-service. Not a terrible idea, except that some of the people who need the most service can least afford the fee. If you view that as separate and not consequential of the “no general funding”, perhaps I can re-award the perfect post moniker.

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Heavy trucks already have an “electronic logging device” mandate. It records miles traveled among other things. The big push for them was to monitor hours that drivers on on the road. So a VMT that applies to these trucks can probably piggyback directly on the ELDs.

See page 14 here: https://www.cbo.gov/system/files/2019-10/55688-CBO-VMT-Tax.pdf


Correct me if I’m wrong (I have little experience with telematics), but I assume those who opt not to have an UBI device for insurance get thrown into the All Other bucket for their vehicle type. So, if the average number of accidents in a group is X and the UBI drivers make up 50% of the pool and average 0.5 * X, the non-UBI drivers will have to average 1.5 * X to get the overall average.

I also assume that we can get a pretty good estimate of miles driven in America by looking at traffic rates on all the major roads (using cameras) and estimating the corresponding usage on smaller roads. Those who use telematics will have their mileage directly measured, everyone else will be in the all other bucket (and their mileage is the average of all other). Mileage can then be multiplied by weight class of the vehicle to calculate wear and tear on the roads. Those who have low mileage may be incentivized to get a GPS tracker. Those who don’t want to be tracked by GPS will be given the average of “all other”.

Regarding general funding here is where I may slip from perfect. Or… maybe not.

In a society using capitalism with a (free? competitive?) market as its means of wealth and income distribution taxes on the wealthy must redistribute wealth and income to the least wealthy and those with the least income.

Here’s my reasoning:

  1. In any society the concentration of power is detrimental to the health and security of the society. Too much power at the bottom you have mob rule, too much at the top you have authoritarianism. This does not mean equal distribution of power but rather a balance of power with checks for overuse or abuse.
  2. With capitalism, more than any other system, wealth (ownership) and income (cashflow) are a measure of power. The weakness in the system is that an over concentration of wealth or income creates an over concentration of power that allows a manipulation of the system.
  3. To protect the system from the weakness of an over concentration of wealth a portion of the wealth of the society needs to be distributed so the maximum number of members have an opportunity to compete. More competition creates more efficiencies. Accumulated wealth from the past stagnates the system.

The fact that the US has a top marginal tax rate below 50% is stupid. The fact that basic needs, food, housing, healthcare are not met for a huge portion of our population is cruel and stupid.

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Mileage is already recorded in any state where an emissions is required. Why not have a base tax of x per mile driven and have different rates per weight class?

Americans seem to dislike the idea of paying by the mile simply for the privilege of driving, like it’s at odds with our culture of freedom. Not saying I agree or disagree.

ArthurItas, how do you feel about your state’s special registration fee for EVs? It changes every year, and last I checked it was around $210 for non-commercial vehicles. This applies simply for owning the EV regardless of how much it’s driven. IMO, the system is pretty decent if you bought an EV back when there were massive subsidies and you drive it a lot; but it’s a raw deal if you’re just now buying your first EV and don’t drive much. I don’t have as much of an issue with mileage measurement, especially if it’s voluntary; e.g., either show your odometer or pay a default fee.

I think the $210 flat fee was roughly equal to expected annual fuel tax paid per vehicle. Just government wanting to hang onto that revenue rather than trying to assign true cost of road maintenance to end users.

I am not clear on how roads are funded now. I see 3 classifications out there. Streets, roads, and highways.

Highways get funded from both state and federal gas taxes. I get that.

Roads, which connect towns and villages, are typically state routes. These get funded via grants at both the state and federal level. But mostly state funding is my impression. I could be wrong there.

Streets are the responsibility of the local entity. In my county, it’s funded by property taxes. The gas may also contribute to general revenue via a local sales tax. Again, I’m not clear on that.

In any case, the amount of road maintenance covered by gas tax has been shrinking as a % of total expense. The EV wrinkle is just accelerating a trend that was already there. The roads get older and the fuel efficiency gets bigger. That points in only one direction.

So I hope we pause and contemplate where we want to end up in the end , then consider the best funding alternatives. Replicating the current system with a few tweaks seems silly.

Road funding in the US is an inconsistent patchwork. Much variation depends on local decisions. In addition to fuel taxes there are tolls, property taxes, general state and federal shared revenue and vehicle registration fees.

The quality of roads in different areas depends mostly on the funding devoted to maintenance.

If you travel around the country you’ll find that many places have terrible roads and that is because the local authorities are not spending to maintain the roads.

While poor roads are generally more of an inconvenience this can be a huge safety issue especially as we’ve seen a number of high profile bridge collapses.