Vermonts thoughts on electric vehicle taxes to make up for future transportation fund revenue losses

There are 10 (?or more?) states around the U.S. who have either enacted electric vehicle taxes, or are considering them. The observation is that electric vehicle owners are not paying anything into the transportation funds, because the current funding method is the gasoline tax. Electric vehicles don’t consume gasoline, or diesel, and therefore don’t pay gas taxes.

I’m researching these taxes for an upcoming article and came across a really cool paper written in Vermont, to educate the Vermont legislature as they consider an electric vehicle tax. It’s a very well written paper describing the issues very nicely.

Here’s a few quotes from the paper

The arrival of electric vehicles on Vermont roads presents policy makers with competing goals. On the one hand there are policy goals, such as those described in the 2011 Comprehensive Energy Plan, that support and encourage adoption of electric vehicles in Vermont while on the other hand the need to continue to fund the transportation system requires some assessment of fees for all users of the system.

The state’s Comprehensive Energy Plan sets a goal of 25% of the vehicle fleet being powered by renewable energy by 2030. Assuming renewable electricity is the source of transportation energy, this would result in 142,975 all electric vehicles on the road in 2030 which would represent a loss of nearly $21 million of gasoline tax a t current gasoline prices and average vehicle efficiency.

One concept this report references is the use of existing electric rate setting and fee collection mechanisms to assess transportation energy charges from electric vehicles based on their energy use. This would require some type of metering as well as routing of funds from the local electric utility to the Transportation Fund. Today’s electric powered vehicles have a strong correlation between electricity use and vehicle miles traveled and thus electric energy use could serve as a good proxy for transportation system use. In addition, collecting transportation user fees from electric use, combined with Advanced Meter Infrastructure (AMI) would allow for various price signals, including time of use rates, and efficiency charges to be levied. CNG sold for transportation is already taxed via the state sales tax and the state is developing protocols to deposit these revenues into the transportation fund by July 2013.

There is discussion within the transportation community that it is time to consider alternative funding structures to the current motor fuel tax mechanism, which is increasingly failing to provide adequate revenue to fund and maintain our transportation system. Further, as the range of fuel efficiency within conventional vehicles and the overall operating efficiency of vehicles of all types increases, using fuel or energy use as a proxy for overall system use (i.e., miles driven), as we currently do with gas oline and diesel taxes, is less and less appropriate.

Related is a law making its way the through the Vermont legislature. That law includes changes to the gasoline tax, and calls for study of how to tax electric cars. http://www.leg.state.vt.us/database/status/summary.cfm?Bill=H.0510&Session=2014

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About David Herron

David Herron is a writer and software engineer living in Silicon Valley. He primarily writes about electric vehicles, clean energy systems, climate change, peak oil and related issues. When not writing he indulges in software projects and is sometimes employed as a software engineer. David has written for sites like PlugInCars and TorqueNews, and worked for companies like Sun Microsystems and Yahoo.