States Are Now Testing Out EV Taxes To Replace Gas Tax Revenue as Gas Powered Vehicles Are Phased Out

Electric vehicle

Not many people can do an intricate breakdown of how our tax codes actually work. But everyone would have something to say if the public goods and services funded by those taxes were to lose their funding suddenly.

For example, many people likely (hopefully) know that tax dollars fund our public roadways. But comparatively, fewer people are probably aware that the federal government's Highway Trust Fund (HTF) from 1956 is responsible for banking our shared roads. Without it, roadways would not retain their maintenance funding.

However, as Internal Combustion Engines get phased out, the HTF risks losing out on most of its funding. Why? Because gas taxes currently fund 80 percent of the HTF.

The question now becomes, what will replace the gas tax that ensures our roads and highways keep getting the maintenance they need?

Some states, such as Oregon, are already testing new methods for a replacement tax that electric vehicle (EV) owners will pay.

A Miles Traveled Tax Future

The federal government has proposed using GPS tracking to collect data on how many miles people drive.

But states, like the previously mentioned Oregon, are not waiting for the federal government to finalize and roll out their plan, electing to handle the future of their road and bridge maintenance as a state issue.

A wise choice when considering Oregon has approximately 74,000 miles of road and 8,000 bridges. That's a lot of infrastructure that needs maintaining.

Under their plan, OreGO drivers are charged 1.9 cents per mile traveled by vehicle. Every cent collected by OreGO goes directly into the Oregon State Highway Fund.

To give some context, Oregonians currently pay 38 cents per gallon in fuel tax. But with the state's mandate for all vehicles on their roads to be zero-emission by 2035, fuel tax revenue will start drying up quickly. However, Oregon will be raising its fuel tax rate to 40 cents per gallon in 2024.

Like the federal government’s idea to track mileage via GPS, Oregon will plug a GPS tracker into a vehicle's OBD II port to confirm how many miles it has traveled on its roadways.

EV Owners Will Not Like What Comes Next

Many EV buyers have been the beneficiaries of substantial government subsidies as Big Brother uses these incentives to push the public in a more EV-friendly direction.

However, as the early days of EVs come to a close and the number of gas-powered vehicles spotted on our streets starts to dwindle, EV tax breaks will cease to exist.

Many of these EV incentive programs are already in danger of being slashed. The more common EVs become, the less economically plausible they become.

There are also going to be significant privacy issues that come with closely tracking every mile private citizens drive.

A potential solution for privacy concerns is to have a third party oversee these pay-as-you-drive mileage programs. There will also need to be specific rules for how long this data can be stored and who can access it.

But one thing is sure: road maintenance faces an uncertain future once a new milage taxation system is fully worked out and integrated.  

Source: (AutoWeek)

Author: Jarret Hendrickson

Title: Writer

Expertise: Automotive Industry News, Film, Drama, and Creative Writing.