Utah Legislators Want Extra Tax For Owners Of Hybrid & Electric Vehicles

from the incentive-structure dept

Pickle Monger points us to the news that some Utah legislators are hoping pass new laws to add an extra fee for owners of hybrid and electric vehicles. The complaint is that those people don’t spend as much (if anything) on gas, and thus don’t pay gas taxes. Of course, they’re also not polluting the air quite as much, which was part of the point. The article notes that other states are considering similar taxes and fees on those who buy such cars. It’s as if politicians don’t recognize how incentives work…

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Comments on “Utah Legislators Want Extra Tax For Owners Of Hybrid & Electric Vehicles”

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Ccomp5950 (profile) says:

in Utah the gas taxes are earmarked for road maintenance. I can understand “oh they aren’t paying their fair share of taxes on the wear they create on roads.” and true, they are not if they have to purchase less gas.

However like you said there is good reason to incentivize hybrids.

The question then is, how much more tax should they pay? Should they be charged at the same rate as a fully loaded full size truck would if it purchased fuel for 20,000 miles per year? I would think not, most hybrids are smaller vehicles and create less wear on roads.

The smart move would be to increase the tax on diesel in the state and let the increase in prices it creates trickle down evenly to customers. Companies will pass on their expenses to customers and it is a lot less hassle then trying to find that demarcation line where hybrids should pay.

magnafides says:

Re: Re:

Increase the tax on diesel? That makes about as much sense as taxing hybrids.

Diesel is already insanely expensive, due to the increased refining cost associated with stricter emissions standards put in place by the government.

Also, you seem to imply that businesses are the only ones who use diesel in their vehicle which is, to put it nicely, an “uninformed” point of view. When I (an individual) bought my clean diesel vehicle in May 2009, the fuel was 17c CHEAPER than low-grade gasoline, now it’s somewhere between mid-grade and premium. Now you think I should be taxed additionally?

Ccomp5950 (profile) says:

Re: Re: Re:

Yes, I do. Diesel is already taxed a penny less in the majority of states than gasoline. If given the choice I would increase the Diesel tax by 2 cents if I absolutely had to have the tax revenue in that manner. I’m not sure how Utah taxes are controlled or if it’s just at the whim of the legislature. This wouldn’t be passed onto farmers and other groups that pay a lower tax on diesel. Say you go through 80 gallons a month you’d see an increase of a dollar and 60 cents per month. This is probably a good estimate for home users. Where as businesses with fleets of vehicles and 18-wheelers will bear the brunt of the tax burden and will either eat it or pass it onto their customers.

Admittedly there will be secondary “taxes” beyond the 1.60 you see, in the form of higher cost of goods that need transport being passed onto you but if you think the cost of a value meal at McDonalds per month is too much to pay for road upkeep, you need to quit watching Glen Beck.

All in all we’re both paying somewhere around 50-70 cents per gallon (if you exclude sales tax in your state) on gas and diesel in the form of taxes.

The other option is increase other taxes. But government services cost money, expect to pay taxes in some form or another.

Jay (profile) says:

Re: Re: Re: Re:

Now think about this…

Diesel is an offshoot of making gasoline. Effectively, you’re asking people to be taxed for a product cheaply made.

This doesn’t begin to describe the other avenues of taxation that make no sense, such as making biofuel (when does it make sense to turn your food into a car fuel?).

Just because hybrids are using less gas doesn’t mean the money saved (consumer surplus) isn’t being used elsewhere. Hybrids are still more expensive than regular cars, and the money from gas goes into higher electricity costs in terms of electric cars. There could be better ways to tax than saying “hybrids should pay more for the same roads” as your argument seems to imply.

Jay (profile) says:

Re: Re: Re:3 Re:

Bad wording on my part:

“Just because hybrids are using less gas doesn’t mean the money saved (consumer surplus) isn’t being used elsewhere.”

Should read:

“Just because hybrids are using less gas, doesn’t mean the money saved isn’t being TAXED elsewhere [through other goods].”

Personally, I don’t see why having money in a savings account is necessarily a bad thing. My argument is more about being very careful about taxing hybrids for “not using enough gas”. It’s sending the wrong signals in Utah and might just backfire.

CommonSense (profile) says:

Re: Re: Re:2 Re:

Not to go off topic, but “(when does it make sense to turn your food into a car fuel?)”

How about when that ‘food’ is getting thrown away, and the producers of that food are being paid to throw it away, instead of put it to use? That’s what some of the subsidies for our farming industry do essentially, pay the farmers to throw it out. Sure, maybe sending it to a third world country to feed starving children would be the best option for it, but I’d say turning it into a car fuel is still far far better than absolutely wasting it.

Cynyr (profile) says:

Re: Re: Re:2 Re:

This doesn’t begin to describe the other avenues of taxation that make no sense, such as making biofuel (when does it make sense to turn your food into a car fuel?).

Not all bio fuel is made from food plants(just the inefficiently produced biofuel), and it doesn’t even need to compete with food growing land.

The problem here is that very little of the general tax fund is making it’s way to roads. So when you have a high MPG car, you pay less tax per mile.

A simple solution would move to requiring odometer readings when you get new tags, and taxing you based on the offset. If you sold a car it would then be taxed based on the mileage on it when the new owner gets tags, and would be based on the mileage shown on the title/bill of sale. Odometers are already devices you can not legally tamper with in most of the USA. Grade the tax rate by making some weight classes, and the more it weighs the more per mile it pays. I’m thinking weight is major factor in road wear.

Any Mouse (profile) says:

Re: Re: Re: Re:

If you actually did the research, you would see that diesel is taxed as much or more in most states than gasoline. Perhaps the federal tax is lower? The state taxes are not.

Also, if you truly believe that fuel taxes are used solely on roads, then you’re sadly mistaken. Just because it is earmarked as suck does not mean they do not ‘borrow’ from that revenue, and then fail to pay it back in.

Diesel "Clean" Give it up says:

Re: Re: Diesel Tax

Actually they should stop subsidizing corn production that creates gasoline price fixing and the non-diesel cost would go up and diesel would again be the cheapest fuel alternative. My VW TDI gets 50 MPG and I drive it 30k miles a year it is the cost of doing business.

Maybe we need a federal road tax for people with registered vehicles and based on the weight of the vehicle determines the amount you pay plus the number of miles that you drive.

Anonymous Coward says:

Re: Re: Re: Diesel Tax

Most states already have a road tax, typically called registration. In NY state it is around $98 every two years.

Using a little fuzzy math, that comes out to 3 cents per gallon if you drive 10,000 miles per year, get 30 miles to the gallon, and gas cost ~$4.00 per gallon (which is currently true).

Not an Electronic Rodent says:

Re: Re: Re:

Diesel is already insanely expensive, due to the increased refining cost associated with stricter emissions standards put in place by the government.

Couldn’t resist this one… insanely expensive? Ha! ha! hahaha! haha! haha! haa! haaa! hahaha! aaaaaaa! *thump*

US Diesel cost seems to be around $4.20 a gallon? UK Diesel cost currently around $8.92 per gallon (US). NOW talk to me about “insane”…….

Anonymous Coward says:

Re: Re:

“in Utah the gas taxes are earmarked for road maintenance”

In many places they are. I would prefer to see these taxes placed on something else besides gasoline, though – both because of the hybrid/EV issue and because of gasoline purchases that don’t go into a car (lawnmowers, backup generators, etc). I know you can’t put the tax on registration because you want something that reflects vehicular usage. Perhaps on tires? They have to be replaced in proportion to their usage.

Might stimulate the hovercraft industry as well, which would be a big step towards getting my flying car.

pixelpusher220 (profile) says:

Re: Re: Re:

If only cars had some device to track how much they used… 😉

As we move to both more efficient and other fuel sources for transportation, the revenue from the gas tax will decrease.

In this sense increased taxing of vehicles that will use less gasoline makes sense. But only in that sense. How much do you tax a fully electric car? Infinity dollars?

We need to tax based on actual usage. Miles driven. Certified odometer reading

Anonymous Coward says:

Re: Re: Re: Re:

“We need to tax based on actual usage. Miles driven. Certified odometer reading”

This would probably have to be implemented at the federal level to address miles driven in other states. My inlaws live in Michigan .5 miles north of the Ohio border and do the vast majority of their driving in Ohio. Lots of other border communities across the country would face this issue too.

Beta (profile) says:

Re: Re:

“…the gas taxes are earmarked for road maintenance…”

What exactly does that mean? As I understand it, the road maintenance budget is not equal to the gas tax revenue; the legislature routinely draws off “surplus” funds, or adds money from the general fund. And they know the previous year’s revenue when they make these decisions, so all they’re doing is deciding on a budget and then doing some arithmetic for the press releases.

I’ve heard about “earmarks” like this in many contexts, and as far as I can tell they mean nothing at all, they just suggest a link where none exists. (This is why I am not swayed by arguments of the form “let’s impose a tax on X and earmark the money for Y”, where Y is something I’m supposed to like.)

pixelpusher220 (profile) says:

Re: Re:

The tax on gasoline is an approximation on usage since the amount of usage is directly tied to how much gasoline is consumed.

As you say it’s not a perfect approximation since higher MPG vehicles use less gasoline. They also generally are lighter than other vehicles so they cause less wear and tear on the roads.

That said, the proper way to do this is to tax vehicles on the *actual* mileage used. Which conveniently we have in an odometer on the vehicles themselves 🙂 Simply report miles driven, via certified mechanic, and you pay a certain tax on your tax bill. Can even adjust it for type of vehicle since heavy trucks cause more damage.

The big problem is the gov’t is thinking about putting GPS in every car to do this. Completely unnecessary intrusion in to tracking every vehicle on every road at every second. What we need is the miles driven, not a detailed listing of where everybody went.

John Gardner (profile) says:

Re: Re: Re:2 Re:

Let’s say I live in MA or NJ and spend the great majority of my commute driving on the local Turnpike. That is essentially a private road to which I’m paying more money to access. Should I still be taxed on mileage driven?

The fact is there’s very little chance for a silver bullet to exist and any tax will adjust incentives and therefore behavior.

Anonymous Coward says:

Chicago city stickers could cost more for SUVs, less for hybrids

Chicago seems to have the right idea. Penalize gas guzzlers, heavier vehicles, incentivize hybrids.

Owners of gas-burning cars that weigh more than 4,500 pounds — such as sport-utility vehicles — would increase $35 to $155, and trucks tipping the scales at more than 16,000 pounds would go up $35 to $455.

Electric cars, meanwhile, would get city stickers for free as part of the plan. Small hybrids would go down to $25 annually, and larger hybrids would be $65.

http://newsblogs.chicagotribune.com/clout_st/2011/04/chicago-city-stickers-could-cost-more-for-suvs-less-for-hybrids.html

Anonymous Coward says:

Re: Chicago city stickers could cost more for SUVs, less for hybrids

I assume that’s their vehicle registration costs? (didn’t read the article). That’s a lot of money just to register the vehicle in their city! It this happens, I expect a lot of large vehicle owners to start registering in nearby Wisconsin, especially since a lot of them own property up north anyway…

Their heart is in the right place though.

Anonymous Coward says:

Re: Re: Chicago city stickers could cost more for SUVs, less for hybrids

Correct, It is for registration/vehicle sticker. The State of Illinois does not have a vehicle/property tax. Simply annual registration. Granted the cost for a passenger car is only $99, and a semi-trailer is a over $2,000.

A Dan (profile) says:

Obvious

If they’re looking to pay for road maintenance, make the fee based on the weight of the car. That’s what really contributes to road wear, so why not charge in direct proportion to the cost of repairs?

If you want to actually incentivize hybrids, give them a credit on their registration or excise tax or whatever the state or town does.

Make it all transparent, not hidden, costs. Is that too much to ask?

Gwiz (profile) says:

Re: Obvious

If they’re looking to pay for road maintenance, make the fee based on the weight of the car.

Actually, my state (Michigan) used to charge for vehicle registration based on weight. Somewhere in the 80’s it was changed to a percentage of the BlueBook value of the vehicle because vehicles were getting smaller and lighter after the 70’s energy crisis.

Never made much sense to me. Do newer or more expensive cars wear on the roads more than a 4,000lb Galaxy 500 land yacht from the 60’s? I doubt it.

Beta (profile) says:

Re: Re: Obvious

This neatly gives the lie to the argument that the purpose of the tax is to maintain the roads.

“We’re going to tax your vehicles by weight, because heavier vehicles damage the roads more.”
“Oh look, our cars are getting lighter, good news, right? This means we won’t pay much tax?”
“Uh, forget the weight, we’re going to tax your cars based on something that’s going up, because… because… oh, let’s see…”

Anonymous Coward says:

Re: Obvious

it’s not the weight. It’s a combination of friction and use. a smart system would use weight as a multiplier for a formula based on distance.
then you would also have to account for emissions (which should be measured rather than inferred via fuel input).
so you would pay something like $= f(weight, distance, emissions)

you should probably account for fuel production emissions as well. which means coal consumer electric *may* incur a penalty. PV electric not so much (for simplicity, emissions should be limited to fuel production+delivery which for solar is 0, and generator production+delivery)

But if someone was taxing me for using less gasoline then i’d be tempted to deliver my vehicle to them personally, at high speed. for a really close up discussion (once i backed up) of how stupid they’re being.

they are using the wrong formula for funding their roads.

Anonymous Coward says:

From personal experience, it’s not the tire wearing the road down so much as weather/soil changes that destroy the roads. Although really heavy vehicles do compress the soil more to damage the road, but besides that, this smells of someone making a money grab because their kickback was smaller, not an issue of fairness.

Matt N (profile) says:

So, I live in Utah, and the problems with this are obvious:

I used to commute to work on a motorbike and I would get 60MPG. Under this sort of standard I should be penalized to the point where my gas costs are the same as every else’s because I am not paying my fair share.

By this standard, also, if I drive a gas-guzzling Maibastu Monstrosity and get 3MPG, I should be give a tax incentive to bring my gas prices DOWN so that I pay the same average as everyone else because at this point I am paying MORE than the median and more than mu fair share.

This is all, of course, lunacy.

If they really think that all road users should pay equally there is only one fair way of doing it:

A) drop the gas tax completely for everyone.
B) have a sliding scale as to the cost of yearly registration based on miles driven previously. More miles, more cost.

Now, I am not advocating that either, but to get the effect they want that is really the only fair way.

Cynyr (profile) says:

Re: Re:

not really because it would not be a flat $2/mile for all cars.

your motorbike (very light, a few hundred pounds) might pay $0.20/mile, while a civic might pay $1/mile, and a “gas-guzzling Maibastu Monstrosity that gets 3MPG” might pay $5/mile.

so no, it could be worked to be fairly equivalent lent to the current fuel taxes. or for that matter punish larger cars more.

HrilL says:

They should be taxed

I’m all for less polluting and having incentives for people to get hybrids and EVs but why should they not have to cover the costs of roads. The roads in our country and already some of the worst and these states don’t have the extra money to keep them up. If you’re driving on the roads then you need to pay for that.

Josh in CharlotteNC (profile) says:

Re: They should be taxed

but why should they not have to cover the costs of roads.

Strawman. No one is saying they shouldn’t be taxed. Mike is saying making hybrid owners pay more because they use less gas is getting the incentives backwards.

There are intelligent ways for lawmakers to make sure that those who drive on the roads pay their fair share for road maintenance. As other commenters have said basing it on vehicle weight or mileage driven makes much more sense.

alainb (profile) says:

Taxing electric and hybrid

If you try to walk I will tax your feet…. cause I’m the tax man.
They give?th away with incentives (tax credits) and take?th away with taxes.
When will those idiots disengage from the large corporations that control them. Those idiots are nothing but puppets of Big Oil, and the governments that support the terrorists who attacked us on 9/11. The same governments that have killed thousands of our citizens and well as millions of their own people.

When will those idiots ever learn, and let America once and for all be independent of those murderous corporations and shady kingdoms and dictatorships

Qritiqal (profile) says:

how about a tax on telecommuters?

Don’t drive to work at all? WE MUST PUNISH YOU.
Don’t buy enough products (thus paying sales tax)? WE MUST PUNISH YOU.

Why doesn’t the government just take our entire income and then give us each back what it thinks we should be allowed to have?

BECAUSE WE LIVE IN A (SUPPOSEDLY) FREE COUNTRY.

Stop communism now. Don’t vote Liberal.

Robert P (profile) says:

Utah is not alone

Just google “VMT” and you’ll find a number of states, plus the Fed are looking into alternatives to the gas tax. The study the CBO did (http://www.cbo.gov/ftpdocs/121xx/doc12101/03-23-HighwayFunding.pdf) sounds terrible from my perspective, but I can see the the need for it. I just can’t believe they’d capture all that personal info and not pass it on somewhere.

If it’s true that roadway maintenance is funded through gas tax and that gas usage is going down due to higher fuel economy (hybrids, electrics, etc.) then I can see why we would need to come up with an alternate. I think the one the CBO came up with is not a good one, but I don’t have any better ideas.

Anonymous Coward says:

Reward the population for reducing itself.

How about just rewarding childless couples/singles over the age of 18? Currently we reward child-bearing couples with tax incentives.

By using incentives to keep the population down, you solve all sorts of issues facing the planet, from environmental to economic.

I’ve also wondered why there aren’t insurance companies that offer a reduction in rates if they are permitted to put black-boxes in your car. I certainly would pay a reduced rate if Icould prove I drive slower via black-box/GPS technology. Those concerned about privacy or not being tracked can of course still go without (and pay higher rates, of course.)

chuck says:

I don’t want an already overly curious government to know how many miles I drive and to where, or how much gas I buy.
They track you with your credit cards, you phone and now by your tax statements about how much gas you used during a year?
What would this somehow be reported to the government? No sir I used exactly the average amount of gas last year, prove otherwise…This could get stupid and cumbersome.

alainb (profile) says:

A tracking device is available

That?s not the point. EV’s are using electricity. We all pay taxes and surcharges on the electricity we consume. If the state, any state, is concerned about road taxes not being paid by EV owners, they should have the electricity companies contribute the additional taxes collected from EV owners to compensate for the taxes not collected from the loss gasoline sales

Chris in Utah (profile) says:

As the resident Utard here our mormon assault vehicle (the van in case your wondering) still gets us around. Just one more reason I choose the Folkway of a Heathen when we do decide to hybridize our vehicle.

On a side note my neighbor I drive to work at the local Wal-mart was talking about what the managers had to say. If your not making enough the state is there for you… after all that’s what they are there for.

The double-think word your looking for is
Tax Haven

alainb (profile) says:

I've also wondered why there aren't insurance companies

Most insurance co will offer a discount for having a tracking device in both commercial and passenger vehicles.
A solution to the additional tax on EV is to replace the standard “road tax” on fossil fuels with a “black box” connected to the state. Then they can just send you a monthly bill.

Can you say “1984”?

Beta (profile) says:

Re: Re:

“How much of the present gasoline tax is actually spent upon road maintenance?”

It might be more than all. That is, the road maintenance budget might be higher than the gas tax revenue where you live– there are certainly places where it is. In other places it’s lower. Anyway, the two aren’t connected except in PR campaigns, so you could just as well ask “how much of the present sailboat excise tax is actually spent on ham radio license enforcement?”.

PrometheeFeu (profile) says:

This makes total sense. Then we should raise a new “poor” tax because those freeloaders are paying less income tax. And perhaps a tax on renters for not paying property taxes. And also a tax on bicycles because bicyclists don’t pay any DMV registration fees. Let’s not forget a thrifty tax on people who spend their money wisely because they don’t pay as much sales tax.

btr1701 (profile) says:

Tax

Do they also levy a special fee on anyone who doesn’t even own a car?

Not only are those scofflaws avoiding gas taxes, they’re also avoiding all those car registration fees and whatnot. Imagine the revenue the state is missing out on from those people.

What’s that you say? If they don’t own a car, they’re not using the roads?

Nonsense. They may be carpooling to work. Sitting in the passenger seat of someone else’s care. Or riding their bike to work on those roads. They’re definitely enjoying the myriad benefits of a society where all those roads make commerce so much easier. How dare they choose to live a lifestyle which makes it difficult for the government to properly charge them for it?

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