Taxes for the sake of Taxing?

Taxes for the sake of Taxing?

Found an interesting article and would like to hear some thoughts.

Mycroft | January 26, 2012

Forcing EV owners to pay for a separate electrical drop and meter is crazy.

My opinion is that EVs should be taxed based on mileage in states where an annual safety inspection is required or with a flat fee on tags otherwise.

jbherman | January 26, 2012

Another idiot Kansas legislator (and I live in KS)! I don't think this will get much traction. It's not as if KS has a large EV population. What he proposes would be nearly impossible to enforce.

phb | January 26, 2012

States are going to have to figure out a new way to collect revenue for road maintenance... eventually. I was talking about this issue with my State Representative the other day and this is certainly an issue that he sees coming up pretty soon.

Another thing to think about is that drivers of ICEs that get better mileage pay less towards maintaining the roads and bridges than drivers of ICEs that get less. Some of that makes sense because larger, heavier cars often get worse mileage while doing more damage to the road system. However, a lot of the maintenance that needs doing has nothing to do with damage done be vehicles. (I'm thinking about the effects of rain, freezing, etc)

I guess the point is that, as fuel economy goes up, we are going to have to find a new way to fund the road systems... regardless of the adoption of EVs. EV drivers will, and should, have to pay towards the use of the public road system but I think that its a more complicated problem that the legislator in that article is getting at. I also think that it's the wrong time to place an external impediment to EV ownership; the market is simply too young.

stephen.kamichik | January 26, 2012

The experts at taxing for the sake of taxing are the politians in Quebec. We often pay the same tax(es) several times. Example: we pay registration for our vehicles to Quebec and TWICE more to our fair city (Montreal). To add insult to injury, the taxes are not used for what they were collected. Lots of corruption in Quebec?!

Jason S | January 26, 2012

Road wear is based on vehicle weight and tire size. Therefore just do it at the DMV, but this becomes a HUGE problem for the amount of data that needs to be collected by checking the odometer. For smog check states (just California?) the odometer reading is already gathered, so no big deal.

If convert the whole thing to something similar to smog check states and let it be 'safety checks' then can gather the data at existing mechanics once a year. That data gets fed into the DMV system and you pay the variable DMV tax with low low financing rates available.

It would convert the tax from a flat tax on fuel to a usage tax. Current DMV taxes appear to be basically a flat property tax similar to house taxes, so maybe the tax becomes slightly more complicated but we've got computers and databases to handle that sort of thing already.

SteveU | January 26, 2012

In California you don't ever have to get an electric car smog checked, so capturing the odometer at that time... doesn't work. (And even for ICE vehicles you don't have to get a smog check for the first... umm... not sure but it might be 5 years.)

Thumper | January 26, 2012

I think it is totally reasonable to pay for road building and maintenance. It seems to me the easiest and fairest would be to report once per year to the DMV for an odometer read and then pay a base fee which would be the same for all plus a fee for milage multiplied by weight.
Of course, I think it would be reasonable to pay a base fee for general overhead plus a fee based on the weight of the traveler and luggage combined for air travel so maybe my ideas are weird.

JohnQ | January 26, 2012

The annual fee concept is really just a significant increase in registration fees in lieu of the gas tax. One advantage of the gas tax is it's levied over the course of a year rather than in one lump sum. In CT we pay $0.25 per retail gallon (at the pump) and $0.27 per wholesale gallon (first sale within the state). For a 12,000 mile driver at 25mpg that's $250 per year. Tough to add a $40 registration fee and ask for $300 in lump sum each year (on top of the lump sum personal property tax we pay on vehicles).

The trick is to pay incrementally so it's not as painful. And, if odometer based, there will be quite a bit of "rollback" going on!

stephen.kamichik | January 26, 2012

It is hard to "rollback" digital odometers.

JohnQ | January 26, 2012

Hah, that's a good point! I'm obviously thinking old school . . .

Robert.Boston | January 26, 2012

Having lived in annual inspection states for 30 years, I'm a big fan of such inspections and the opportunity to use these as a point of collection for highway taxes. Inspections are far more than just "smog checks"; they insure that every vehicle has fully functional headlights, signals, horns, etc. It keeps unfit vehicles off the road.

In crafting these charges, what do you do about PHEVs? They burn some gas, so pay taxes there. I suppose all PHEVs could be required to maintain "electric miles" separately, but since some (e.g. Volt) blend electric and gas miles, even that isn't perfect.

Jason S | January 26, 2012

Since it is a road wear tax, I imagine electric and ICE would pay the same. It is replacing what the fuel tax does in theory.

petero | January 27, 2012

Eventually, we all will pay a fair share to maintain our roads. It is way too early to think of tax parity between ICE and EV. However …it is “time to stir the coals.”

Our government doesn’t see a difference between a hybrid and an EV, and they offer the same rebates and incentives. There are two reasons Big ICE makes hybrids: consumer demand and CAFÉ. Giving the same incentives to hybrids encourages the same old mind set to build only “slightly better” widgets!

I feel our benevolent despots in Washington and state capitals should emulate the punitive nature of tobacco taxes on the auto industry by raising gasoline taxes to fund better roads, mass transit, r & d, etc. Big ICE has dragged their feet on safety, emissions, and most everything else, they have too much influence in Washington. For Pete's sake what other country would kill the family station wagon so they could market inefficient, sexy, SUVs? My opinion, higher gasoline prices and taxes will have a more dramatic effect on ICE manufacturers than legislation.

Sorry for my venting. Yes, I think EVs should receive a rebate and not hybrids - very self serving.

Teslamodels4me | January 27, 2012

EVs are zero emission and have huge environmental benefits, taxes should be waived until this "NEW" technology gets legs and becomes mainstream like the Internet. These vehicles are helping reduce our countys addiction to oil/war on terrorists. Instead of thinking of a way to tax them we should be rolling out the red carpet and funding a the contest for the person or company that produces a battery with twice the energy of the batteries that are currently available. This is not a perfect plan but is a good start.

Brian H | January 28, 2012

Jason S | January 26, 2012 new

Since it is a road wear tax, I imagine electric and ICE would pay the same. It is replacing what the fuel tax does in theory.

If it replaced (eliminated) fuel taxes, I'd think you'd get ICE drivers onside pretty quick.

Nick Kordich | January 28, 2012

A fuel tax pays for road repair, but it has another effect: the higher costs cause people to value efficiency and favor habits and products that tend to have a smaller environmental impact. When gas is $3.40 a gallon, folks tend to drive a little more efficiently and tend to buy more efficient cars than when it costs $2.95, even if there were no hybrid or EV options.

Think of it like the little green leaves in the displays on hybrids that act as a reward for efficient driving. In making it an annual tax rolled into your renewal instead of a higher price in your face every time you fill the tank, it's less like a weekly kick in the nuts and more like a New Year's resolution - I've already 'fallen of the wagon' with mine, and it's not even February.

Sudre_ | January 28, 2012

The expensive gas effect only seems to work here in MO until they lower the price one cent after raising it a ten. Our gas tax is so low they can't afford to repair any roads. They are seriously discussing making parts of interstate 70 a toll road between St. Louis and Kansas City even tho the voters voted the option down.... altho most things we vote on in MO get rewritten or over turned by our politicians.

olanmills | January 30, 2012

They are going to have to tax electric cars in some way at some point. Tax from gasoline sales is used to fund roads and other public costs of driving. In most states, that means those of us with EV's won't be paying our fair share. At some point they're going to have to tax us in some form or another.

The only problem I see with this guy's bill is that it's not practicable. You can't enforce that the car owner will plug their car into the outlet that's monitored by the extra-tax meter. Though I'm assuming that's how it would work. If there's something distinct about the characterstics of the electric current being drawn for EV charging, then I suppose it's possible. However, it seems to me that what you would really need is some kind of standard adopted by power companies and electric car makers that specified some kind of special system such that the car was only able to charge from a special outlet installed at the home, and via either data connection or local meter, the power company could record energy consumption specifically for EV charging.

"Big ICE has dragged their feet on safety, emissions, and most everything else, they have too much influence in Washington. For Pete's sake what other country would kill the family station wagon so they could market inefficient, sexy, SUVs?"

Big ICE has made what consumers wanted and made what innovations they needed to compete with each other. Yes, there are varying degree to which they succeed at understanging what consumers want. Airbags, ESC, VVT, hybrids, even plain old ICE MPG have all been continually improving and I'd argue most of that is due just to regular old free market competition. Today's cars are way better, more efficient, safer, comfortable, and fun than they ever were.

The big automakers sold huge vehicles because people used to like them (some still do). Electric cars are now beginning to be more real because people want to drive them; they want to buy them.

Sudre_ | January 30, 2012

The only problem I would have at tax time is states friendly to big oil or a particular car company taxing EVs something like 50 cents a kilowatt or more so they can encourage the purchase of ICE vehicles.

I am also pretty positive that my local electric company would add on a special fee for a meter that calculated EV charge time. That would be a cost in addition to state and local taxes.

EdG | January 30, 2012

If the taxes were only for road maintenance support, and not for the various, sometimes fantastic (as in fantasy), incentives, it would make sense to charge some annual tax based on a vehicles mileage and weight capacity. [Would U-Haul trailers have to be outfitted with odometers to get a license plate?]

It could be composed of some fixed baseline cost (for the right to use all the roads) plus an estimate of road damage done by each vehicle, with the heaviest paying far more. Attempts to mitigate road damage per pound of load by purchasing trucks with a higher number of axles would be rewarded with lower taxes.

And, no, you can't color EV electricity with dye and stick a sensor on the battery to make sure you filled up from the correct type of meter. (That's what's done with diesel versus the otherwise equivalent heating oil.)

brianman | January 30, 2012

"paying our fair share"

My fair share is 0%. Until someone put a number on things instead of loose meaningless language, I'm picking a number.

So I'm already paying more than my fair share by the current definition.

Sudre_ | January 30, 2012

Actually EdG you can have the car send back a harmonic over the power line that the meter will read and know it's an EV charging and how much. But I am very much against taxing at the meter and much more into what you described.

petero | January 30, 2012

You are correct, Big ICE’s cars and trucks are better, cleaner, safer, and more efficient than they were- they should have improved, decades sooner. Detroit fought our government every step of the way. If you do some due diligence, you will be shocked at Detroit - Profits came before consumer safety, reinvestment, the environment, R&D, etc. Read how Detroit built trucks and SUVs heavier to be exempt from safety and smog rules. Detroit offered huge rebates and incentives to move the metal. Remember Detroit felt small cars-small profits.

Why did consumers buy so many large pick up trucks? They were cheaper than sedans and mini vans. Why were they cheaper- they had almost none of the safety equipment that cars required.

One last point, if GM is so great how did the Volt degenerate from a BEV to a hybrid. I do give Chevy credit, I think their amphibian has the best hybrid system on the market.

phb | January 30, 2012

@EdG: I just wanted to point out that, given that the road maintenance taxes are paid for through gas use, those who tow already pay more while towing because they use more gas doing it. The point is that you don't have to monitor how far the u-haul goes under the current system because the guy towing it is paying for its impact by using more gas.

Case in point: I own an Airstream trailer that I tow with my Suburban. Each vehicle weighs about 6000 pounds. When driving the Suburban on the freeway by itself I get somewhere between 18 and 20 mpg; while towing I get somewhere between 9 and 10 mpg. Each vehicle has the same number of axels and wheels so I'm guessing that, while towing, my impact on the road is roughly double what it would be without.

I guess my point dove-tails with yours: the system, as it exists now, is one in which there is some relationship between impact on the road system and amount paid to maintain it. However, as gas mileage increases and EVs become more and more popular, we're going to have to find some way to pay for the road system that isn't based on gas taxes... entirely.

@ no one in particular: I don't think that it's reasonable to refuse to pay towards the use of the roads, even for someone without a drivers' license or car. We all benefit immensely from the public roadway system; to say that one who rides his/her bike shouldn't have to pay to maintain the roads because they don't use them is inane. They do use them, just not directly. That said, I'm also okay with the notion that those of use who choose to use the roads directly pay a little more towards them, especially if that payment is proportional with our impact (miles driven, weight of vehicles, use of studded tires, etc.)

Somehow this comment got really long, sorry.

stephen.kamichik | January 31, 2012

When you plug in your EV, it sends a small signal to determine if it is safe to charge (according to TM). An extra-tax meter can detect this and charge accordingly. In electrical engineering this signal exchange is called "handshaking". An example of handshaking is the signal exchange between a computer and printer.

EdG | January 31, 2012

I'm sorry. I don't understand. What sends a small signal? Which direction is this signal? Is it from charger to car or the other way around? Under what circumstances would the sender say it's not "safe to charge"?

Volker.Berlin | January 31, 2012

Charger and car talk to each other. If there is no charger, the car won't get a reply and must fall back to same very basic default behavior, i.e., draw no more than 5kW or whatever is the greatest common denominator of stupid wall sockets.

If there is a charger, it can tell the car how much power it is allowed to draw. It may also inform the car about different tariffs, allowing the car to postpone charging (if not instructed otherwise by the driver) or it may even offer to sell back power to the grid at an attractive rate.

Those are just some obvious examples. There still is no standardization (or you could say, standardization is still in progress). I don't know which kinds of "messages from the charger" the Model S will support, and for which types of charges.

Douglas3 | January 31, 2012


About road taxes for EVs

First of all, I don't know about your government, but ours never uses these dedicated taxes for what they were purportedly for. For example, here we have a tire tax intended to solve a tire disposal problem, but they never spent a dime to implement a solution. They just dump the money in general revenues and spend it on whatever.

Secondly, if the gas tax was even remotely fair, you would pay 1 cent per gallon and trucking companies would pay everything else. Their big heavy vehicles do orders of magnitude more damage to the roads than a passenger car. Your road taxes are subsidizing the trucking companies big-time.

Third, I'm sure the government will come up with ways of maintaining/increasing their revenue regardless. Hopefully it won't be in some intrusive big-brother way like somehow monitoring your charging.

Brian H | February 1, 2012

Well, if the trucking companies paid more, the goods they carry would cost more. Ultimately, there's only one "pocket" for the money to come out of.

EdG | February 1, 2012

Yeah, better not charge a tax to the cause of the problem the tax is slated to fix. That would be bad.

Sudre_ | February 1, 2012

I do not think the argument about not taxing heavier vehicals completely holds water. At least for longer haul items trains could be used and there is no road tax on trains. The smaller deliveries from the train station to the local store would use lighter trucks maybe even EV trucks.

EdG | February 1, 2012

There is no road tax on trains in the US because the rails belong to the railroads, not the government. | February 1, 2012

There will ultimately need to be some mechanism that collects road maintenance taxes from EV Drivers. Here in California, Caltrans sole source of maintenance funds are obtained from gasoline tax. I think a flat tax for EV drivers initially may be the easiest way to implement this initially, and it should be re-thought as EVs gain popularity.

Douglas3 | February 1, 2012

That's my point, we spend billions of dollars wastefully transporting goods by truck that could be more efficiently shipped by train. If there weren't these massive hidden subsidies then shipping by train would be more competitive.

EdG | February 2, 2012

I've seen trucks with stickers showing the many thousands of dollars of road taxes paid yearly. As far as I know, and I could easily be wrong, interstate truckers in the US pay quite a high road tax. Perhaps you know that, whatever it is they pay, it isn't nearly enough? What information do you have?

I do not know even a whisper of how much smaller trucks pay.

Thumper | February 2, 2012

Yes the railroads own their right-of-way, but most of it was a gift or sweetheart deal from the gov! Read Wealth and Democracy by Kevin Phillips.

EdG | February 2, 2012

True, but maintenance is all their responsibility. Though, of course, subsidies for train operation are not close to zero.

The important thing is that prices to move freight on rails, per ton, are far lower than by truck, and anything that increases rail use and speed would be a good thing.

David70 | February 2, 2012

And also much more energy efficient per ton-mile.

Discoducky | February 2, 2012

All for taxing vehicles that use the road. And it's interesting to think about this changing with EV's.

With gas the tax is paid at the pump. Meaning when I travel to other counties and states the money does as well. With EV's it won't without significant law changes to track the car. Don't think that will happen as Americans don't like to be tracked.

Gas tax is only the beginning though. Think of the other costs to states to support a gas based transportation network. Environmental costs of smog, oil runoff from highways and oil disposal immediately come to mind. And don't you think a huge decrease in smog would benefit large cities for tourism? Think of LA or Phoenix having blue skies again.

I think what states will gravitate towards is having more EV's in their state as they will, on average, be "easier" on roads and cost burdens. They will want to create more incentives for these cars.

I don't know the answer but if I had to guess it will be more of an incentive based system to get at least 10% EV's on the roads while increasing tax on gas. Once the shift starts to happen then bring a flat tax to EV's that is significantly less than the gas tax paid for driving $12K miles a year and keep ramping it up gradually Y/Y that keeps the money flowing. 20 years or so.

To put it more simply: Incentives are the only way to drive the behavior. EV's are less of an overall cost burden on counties and states. Gotta keep the money flowing without impeding the transition to the desired behavior.

EdG | February 2, 2012

I don't think of lessening of taxes for reduced smog an incentive.

For example, I think cigarette taxes should reflect the future Medicare cost of caring for those with emphysema, bronchitis, lung cancer, etc., and calculate it back to the present. Incentives to reduce smoking would tax more than that cost.

Somehow a cost, including health and whatever else can be quantified, might be developed for pollutant increase. That cost would be borne by those chemicals that increase those costs, including power generators of various fuels and technologies, ICE vehicles, leaf blowers, etc. Again, an incentive - more than this more market oriented approach - would be even more of a difference between EVs and ICE.

Brian H | February 2, 2012

The point was that if the roads need repair, might as well just get on with it. Taxing truckers would end up costing consumers as much as a direct expenditure from general revenues/taxes, or more. Safety and convenience have to be paid for, too.

Better road tech would also help. E.g., I gather that asphalt with a hefty content of ground up old tires is tougher, has better traction, and lasts much longer.

EdG | February 3, 2012

The difference is in the capitalistic incentives. If you tax truckers less for damaging the roads less, maybe they'll think about not damaging the roads as much. If someone thinks too much money is wasted on trucking - because of the taxes - and the same thing can go mostly by rail, maybe shipping will become more efficient because people will be making decisions based on costs. To just "get on with it" means just let them all ignore the damage they're doing because it's too much bother to figure things.

Let the people making the shipping decisions work with real data.

Robert.Boston | February 3, 2012

if the roads need repair, might as well just get on with it. Taxing truckers would end up costing consumers as much as a direct expenditure from general revenues/taxes, or more. Safety and convenience have to be paid for, too. -BrianH
Money has to come from somewhere, Brian, and imposing costs on the entities that cause those costs is imminently fair.

As another person wrote, the goal of taxes not merely to raise money but also to change the relative prices of goods and services. If heavy trucking is causing a lot of wear-and-tear on the roads, imposing a tax on trucking will make alternatives (such as rail or barge) more economically attractive. The short-run result is that trucked goods cost more, but the long-run result is that goods are shipped in ways that balance the infrastructure costs with the value.

Robert.Boston | February 3, 2012

/imminently/ -> /eminently/

Brian H | February 4, 2012

EdG | February 3, 2012 new

The difference is in the capitalistic incentives. If you tax truckers less for damaging the roads less, maybe they'll think about not damaging the roads as much.

Say what? Drive more nicely and softly?

Yes, it could shift some long-haul freight to train and barge. But overlay those networks on the highway grid and consider the difference. Not to mention that trucks are more or less available "on demand", and can ramp volume up and down quickly. Train and barge, not so much.

Roads are, of course, shared use, so anywhere a truck can go, consumers/private parties can go too. Rails and canals are exclusive user. The proper analogy might be special truck-only roadways.

Hovercraft, anyone?

EdG | February 4, 2012

BH: Say what? Drive more nicely and softly?

Correct. If you drive more nicely and softly, and can prove it by driving a small van versus a long haul tractor trailer, then you get to pay less in taxes because you do less damage to the road. Keep it simple.

Leofingal | February 4, 2012

Ultimately if the cost to ship by truck increases, the load will shift to rail. We saw this with gas prices in the past few years. As demand on rail grows, the frequency of trains improves. Ultimately the long haul should ALWAYS be on the rail, and the rail to destination should be handled by local carriers. Just like express deliveries are done by air to truck, standard delivery should be handled by rail to truck.

My favorite example of senseless use of trucking is the garbage coming from NYC to the landfills in Upstate NY. There is basically a nonstop stream of trucks along a fixed route from NYC about 250 miles and it is round trip. Hundreds of trucks every day drive this route back and forth. This obviously could be replaced with a dedicated rail line (and there are rail lines in NY state). There is no way on earth that using 18 wheelers makes any sense for that application. It is blatantly wasteful (unless you are the teamsters that got that sweet contract of course).

Brian H | February 4, 2012

There's devil in the details. Trucks can load at source, but stuff has to be brought to the railcars, and then transferred. Same deal at the destination. The big problem with trains is the rails; they can only be laid to a limited number of spots.

So cost is more than straight mile-tons. All the handling and timing indirect expense has to be counted.

Brian H | February 4, 2012

Btw; here's a/the solution to landfills:

Robert.Boston | February 4, 2012

Trucks can load at source, but stuff has to be brought to the railcars, and then transferred. Same deal at the destination. The big problem with trains is the rails; they can only be laid to a limited number of spots. - BrianH
That's why intermodal rail is a fast-growing business. Load the truck trailer, or a container from a ship, directly onto the railcar. Then you don't need to double- or triple-handle the freight, while avoiding paying a driver to move each trailer.