Bipartisan infrastructure proposal includes a new federal tax on EVs (updated)

EV experts have waxed ecstatic about President Biden’s American Jobs Plan, which would include up to $174 billion in funding to boost EV adoption. However, given the political situation in the US Senate, it’s becoming apparent that this proposal is unlikely to become law.

Now the talk in Washington is of a “bipartisan compromise,” which will surely include a much more modest roster of EV initiatives. The latest infrastructure proposal, a $973-billion package that’s backed by 10 Democrats and 11 Republicans, includes a “poison pill” in the form of a new federal tax on EV ownership.

As Politico reports, the proposal includes $15 billion in funding for “Electric Vehicles: Infrastructure & Buses/Transit.” (Biden’s initial proposal would have devoted 15 big ones to infrastructure alone, plus 45 for buses and transit, and 100 for consumer rebates). An “Annual Surcharge on Electric Vehicles” is listed as one of the financing sources for the new investments.

EV advocates quickly denounced the proposal.

“Let’s be clear—EV taxes are not about boosting revenue or creating fairness,” said Joe Britton, Executive Director of the Zero Emission Transportation Association. “These consumer penalties are being pushed by oil refiners to deter EV adoption and to further lock us into a fossil fuel-based transportation system.” He called the proposed taxes “a setback for domestic manufacturing,” and said that “EV taxes punish consumers, worsen carbon emissions, and concede an ascendant American industry—and the hundreds of thousands of American jobs it is set to create—to foreign competitors like China.”

Adding “excess and unfair cost burdens is exactly what the oil-auto complex wants in order to preserve the status quo,” said Chris Nelder, host of The Energy Transition Show podcast.

Proponents of EV taxes, such as proposed taxes that recently failed to pass in Florida and Texas, invariably present them as a fairness issue—EV drivers pay no gasoline taxes, and thus don’t help to fund road maintenance. CalMatters and the Sierra Club, among others, have explained why they believe this argument is a hollow one. Furthermore, 28 states currently impose special taxes on EV owners, and a 2019 analysis by Consumer Reports found that, of the 26 states that imposed EV fees at that time, 11 charged more than the amount paid in gas taxes by owners of comparable legacy vehicles.

The proposed tax may face significant opposition. Senator Bernie Sanders told Meet the Press that he would not support it. The Biden Administration has pledged not to raise taxes on individuals making less than $400,000 per year, and has said it would not support indexing the federal gas tax to inflation, another element in the bipartisan proposal, for that reason.

June 24, 2021 Update: This new tax does not appear on the White House’s fact sheet released on June 24, 2021, nor does a separate proposal to increase the federal gas tax. The New York Times reported that both ideas ran afoul of Biden’s pledge not to increase taxes on the middle class.

MORE: Bipartisan infrastructure deal includes EVSE and electric bus funding

Source: Utility Dive