Are EV drivers really costing states gas tax revenue?

US states have been on an EV-taxing spree over the last couple of years. Many states have established or increased annual taxes on EV ownership—including supposedly EV-friendly states like Oregon and Washington. Proponents of the tax increases invariably argue that they’re needed to make up for a growing shortfall in gas tax revenues (in an earlier article, we explained why such arguments are disingenuous).

In a recent article published on LinkedIn, Joy Kramer points out that, in several ways, EV owners contribute more to state revenues than legacy vehicle owners, not less.

Prior to 2015, Georgia was one of the fastest-growing EV markets in the country. However, as Ms. Kramer writes, “Legislators were so upset about the ever-growing population of electric vehicles…that they wiped away the state vehicle tax credit and tacked on a $200 annual EV user fee.” (The annual fee is now $213 for private vehicles, and $319 for commercial vehicles, plus a special tag fee of $35.)

Kramer cites data from the DOE’s Alternative Fuels Data Center to show that an average passenger vehicle is driven 11,244 miles per year, consuming about $470 worth of fuel annually, which would translate to $122 in Georgia gasoline tax. The $248 paid by an EV owner is a little over double that amount.

However, EVs generate income for the state in several other ways. An EV driving the average number of miles in a year would pay $19 in state sales tax on the electricity used. New EVs also generate more revenue from the state’s Title Ad Valorem Tax (TAVT) because of their higher upfront costs. For example, a base Nissan LEAF costs $31,600, compared to $23,170 for a Ford Fusion, so at the TAVT rate of 6.6%, the LEAF buyer would add an additional $556 to the Peach State’s coffers.

Ms. Kramer also points out that dinosaur drivers are buying non-locally produced fuel. At $2.00 per gallon, Georgia drivers are spending over $11 billion per year on gas, and 87% of that goes to out-of-state fuel producers. If more drivers would switch to powering their cars on Georgia-produced electricity, more of that money would stay in the state—and so would the taxes collected on the gas or electricity consumed.

Source: Joy Kramer (LinkedIn)

  • Troy Frank

    As an EV driver who thinks this is unfair, I completely agree with this article.

    Let’s look at it another way though. Current gas taxes have not been getting adjusted for inflation for around 30 years now, and funding for infrastructure has suffered as a result.
    Trying to increase the gas tax is almost political suicide, so most politicians don’t even want to talk about.
    Seen from that light, these EV taxes are a way to increase infrastructure revenue while the number of affected people is still low. Also, there’s little political push-back about it, as the vast majority of people don’t have EV’s, and don’t care if EV owners have to pay more tax.
    As time goes on, more and more people get EV’s, become subject to the higher taxes, and road/bridge funding improves. Best of all, that funding increase happened without “increasing taxes”, as the EV taxes were there before most people became affected by them.

    So while I don’t like the unfair nature of it, I can see the appeal of doing it this way, for politicians.

    • Biz Sale

      Sure your point makes sense.

      What doesn’t make sense is the authors mathematical explanation of the Title tax and the desciminate selection of comparable. It’s simply sales tax on the market value of the vehicle. By the logic here, the state would make revenue by taxing an ICE 2020 BMW I3, which has an MSRP of about $45,445. That would equate to ~$3,000 in TVAT versus the $2,085 of the Nissan Leaf. A difference of $915. Nearly double the authors illustration.

      When I read articles like this and can easily tell someone is trying to spin the argument, it makes me want to support the position less.