The Mileage Tax Cometh: The State Giveth, The State Taketh Away

“Hybrid and electric cars are sparing the environment. Critics say they’re hurting the roads,” writes Bloomberg. “The popularity of these fuel-efficient vehicles is being blamed for a drop in gasoline taxes that pay for local highway and bridge maintenance, with three states enacting rules to make up the losses with added fees on the cars and at least five others weighing similar legislation.”

According to Arizona state Senator Steve Farley, a Democrat who wrote a bill to tax electric cars, “the intent is that people who use the roads pay for them. Just because we have somebody who is getting out of doing it because they have an alternative form of fuel, that doesn’t mean they shouldn’t pay for the roads.

State and local gas-tax revenue has declined every year since 2004, falling 7 percent to $37.9 billion in 2010, this according to inflation-adjusted data from the allegedly nonpartisan research group. Institute on Taxation and Economic Policy.

That, however, is not the fault of hybrids and EVs. The market share of hybrids is pretty much stuck at around 3 percent, Hybridcars says. The market share of electric vehicles, which generate no gas tax at all, is close to unobservable, pure EVs and plug-ins together hold half a percent of the American pie.

What is true is that sales-weighted MPG of all new automobiles bought and sold in the U.S. os steadily going up. In October 2007, the index stood at 24.7 MPG. In May, all cars sold had an average CAFE rating of 30 MPG.

This is declared national policy, and automakers are working hard to meet the policy. State tax revenue becomes collateral damage.

Farley’s proposed anti-EV tax is a mileage tax. His bill wants one cent per mile driven on Arizona highways by “a vehicle that is propelled by a motor that is powered by electrical energy from rechargeable batteries or another source on the vehicle or from an external source in, on or above the street and that is not capable of being powered by motor vehicle fuel or use fuel.”

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In New Jersey, Democratic State Senator Jim Whelan proposed a similar bill to tax cars by mile driven. The cars would be tracked by GPS. Facing criticism, he now proposes that “owners of alternative-fuel vehicles would be charged an annual fee – about $50 per year, though that is not final” as The Atlantic City Press says.