Study shows tax on plug-in vehicles is not answer to road-funding woes

Given declining revenues from gasoline and diesel fuel taxes and the need for new ways of funding road infrastructure, state and federal policymakers are considering or have enacted annual registration fees for plug-in vehicles. In a paper to be published in the August issue of Energy Policy, researchers at Indiana University-Purdue University Indianapolis say that approach is misguided.

According to the paper, the registration fees already adopted by at least eight states reflect concerns about how the growing number of electric vehicles may affect funding. Electric vehicles do not contribute through taxes to road construction and maintenance.

Those concerns are reflected by a Washington state legislator who is quoted as saying, "electric cars will be driving on the highway right along with all the other cars ... we believe they should be paying their fair share."

In the paper, "Plug-in vehicles and the future of road infrastructure funding in the United States," Jerome Dumortier and Seth Payton, assistant professors in the School of Public and Environmental Affairs, and Matthew Kent, a former graduate student, assess the magnitude of the decline in federal tax revenue caused by plug-in vehicles and quantify the revenue that could be generated from a federal plug-in vehicle registration fee.

The primary revenue-related issue for transportation infrastructure is the extent to which transportation construction and maintenance are tied to gasoline and diesel consumption, Dumortier said.

Given the erosion of the gasoline and diesel tax base, the federal Highway Trust Fund has suffered a decline in its balance and experienced significant funding shortfalls, according to the paper. Over the last seven years, lawmakers have had to transfer $65 billion from the United States' general fund to the Highway Trust Fund to keep it solvent.

One reason that erosion occurred is an increase in , Dumortier said. Between 1980 and 2012, average fleet fuel efficiency increased from 15.97 to 23.31 miles per gallon, a 30 percent reduction in fuel consumption of the average vehicle.

Another reason is the non-adjustment for inflation of the fuel tax rate at the federal level and in most states, allowing the real tax rate to decline over time, Dumortier said.

On the other hand, the erosion in the tax base is only minimally attributable to plug-in vehicles, at most 1.6 percent, Dumortier said.

"The lesson for policymakers is that plug-in vehicles do not contribute significantly to the funding shortfall in the short- and medium run, and a supplemental tax on plug-in vehicles would generate only a small percentage of additional revenue," he said. "We show that the majority of the funding shortfall is due to the non-adjustment of fuel taxes and the increase in fuel efficiency. Thus a registration fee would not alleviate the funding shortfall."

Registration fees for plug-in vehicles also fly in the face of policies intended to promote their use due to concerns about energy independence, energy efficiency and greenhouse gas emissions, Dumortier said.

The researchers cite a federal income tax credit as high as $7500 to incentivize the purchase of battery and state and local government credits or exemptions to sales taxes, excise taxes, registration fees and parking fees.

Even with those incentives, the Energy Information Administration estimates the share of plug-in vehicles in 2040 will be 5.14 percent in its most optimistic scenario, according to the paper.

At least eight states have imposed a vehicle registration fee, ranging from $50 to $200, for alternative-fuel vehicles: Colorado, Georgia, Idaho, Nebraska, North Carolina, Virginia, Washington and Wyoming.

"We hypothesize that the impact of plug-in vehicles at the state level is as small as it is at the federal level in relative terms. Imposing an additional registration fee at the state level will likely have a very small impact on government finances coming from fuel tax revenue," the researchers said.

In the long run, the United States should shift its road infrastructure funding away from gasoline taxes to an alternative system that should be, as most research suggests, based on miles traveled, according to the paper.


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Federal policy reverses benefits of alternative fuel vehicles

More information: Jerome Dumortier et al. Plug-in vehicles and the future of road infrastructure funding in the United States, Energy Policy (2016). DOI: 10.1016/j.enpol.2016.05.005
Journal information: Energy Policy

Provided by Indiana University
Citation: Study shows tax on plug-in vehicles is not answer to road-funding woes (2016, May 27) retrieved 16 July 2019 from https://phys.org/news/2016-05-tax-plug-in-vehicles-road-funding-woes.html
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May 27, 2016
If we still had the crummy cars of the 1970s, we would be using so much gas, we would have great roads.

But the point is real: I pay no gas tax or road tax for our EV, which is tax-subsidized, too. I have wondered how it can be done, but perhaps it will be a blend of tax measures, on sale, on registration, and each year for the number of miles driven.

May 27, 2016
"If we still had the crummy cars of the 1970s, we would be using so much gas, we would have great roads."

Here in the East the roads pretty much are great. Needy bridges are being rebuilt and local/state roads look to be in very good shape. Congestion can be a problem but on some highly traveled roads with many lanes they have lanes dedicated for Easy Pass Only where you pay for the privilege to drive on a less congested road. The "Free" lanes run right along side the faster pay lanes. I find this to be an interesting but still partial solution to the problem.

May 27, 2016
166, in California, we had great roads, free education through PhD, and a wonderful and clean state. What happened? Reagan happened. We have not recovered from Reagan.

We will now have to start re-doing what the Democratic Governors did for us decades ago, before the republicans let it fall apart so Big Business did not have to pay their fair share of taxes.

May 27, 2016
Taxing drivers for the mileage driven is a fair solution but the collection of my individual travel data by government entities really scares me. If they require me to have a GPS in my car in order to collect the mileage fees I have a real problem with that.

May 27, 2016
I see I got voted down by someone who works on a 9,000 hp stinking, clattering Diesel, polluting the entire area.

I wonder what they have against Nature?

166, the mileage meters, odometers, can be fairly well locked, and perhaps the billing can be done by odometer reading. But you are correct, we need some way for those of us with EV to pay road tax. I also agree with the GPS scheme: It is not their business.

May 27, 2016
"We will now have to start re-doing what the Democratic Governors did for us decades ago, before the republicans let it fall apart so Big Business did not have to pay their fair share of taxes."

Yup all of those Democratic Governors have really turned California around since the Reagan years. It is quite a different place today.

May 27, 2016
I already told you we have yet to recover, but we are making it. It was not just Reagan, but two clones Wilson and Deukmejian (DeukReagan). We got stuck with them when the kooks in Orange County used their money to continue the assault on the state's citizens.

And, yes, it is different, but still hobbled by the damage done by conservatives, especially to the schools and infrastructure.

May 27, 2016
Our infrastructure will include thousands of charge points for EV's. Go to ChargePoint or PlugShare and see how many are in various places in Northern and Southern Cal. (I have my own at home).

In the sites, you can choose to see which ones are free.

May 27, 2016
How about a tax on charge point kWh? That can take care of part of it, but we still have the home chargers like ours.

Did you see the infrastructure already available for EVs? It is going to be swamped this year by many more.

May 27, 2016
I like it when the Diesel drivers get mad and vote my posts down. It verifies my opinion of their emotions overruling their rationality.

Since Diesels pollute so heavily, we should impose pollution taxes, to compensate for the damage they do to us. It is only fair, . . .

May 27, 2016
I wonder how much nasty stuff is blasted into our air by huge 9,000 hp stinking Diesel engines?

Do any of the folk on them actually think they are environmentalists, and not just environmental vandals?

May 27, 2016
OK Gkam I'll bite, what exactly it that 9000 HP diesel engine doing? Backup power, a marine engine or what? Just for giggles please explain to me how this engine could be replaced by renewables.

May 27, 2016
Prime movers of that size are usually either stationary power or large marine. That one is on a boat shoving barges, probably.

When in the foundry, we made four, six, and eight-cylinder engine blocks for De Laval, used for stationary power. The eight was 10,500 hp. Some of these were also used for ECCS in Nuclear Power plants.

May 27, 2016
I wonder how much nasty stuff is blasted into our air by huge 9,000 hp stinking Diesel engines?


So now you are going to play marine power engineer too? Cher, you have a serious mental condition.

Please tell me what you would to replace the 9000 hp diesel engine on the line haul boats? Got some plan to use windmills? PV panes? Sails and oars? ANY other transportation method is dirtier for the same cargo. More fuel hungry for moving the same cargo. Rail is the next most efficient, and it is three times more expensive. One, just one, of our line tows carries what would take 200 rail cars to carry or take 500 over-the-road trucks to haul.

Do any of the folk on them actually think they are environmentalists, and not just environmental vandals?
What YOU use to replace the line haul boats with?

glam-Skippy, you are truly an idiot and take every opportunity to show it.

May 27, 2016
Prime movers of that size are usually either stationary power or large marine. That one is on a boat shoving barges, probably.

When in the foundry, we made four, six, and eight-cylinder engine blocks for De Laval, used for stationary power. The eight was 10,500 hp. Some of these were also used for ECCS in Nuclear Power plants.


I knew you were really stupid, but choot, you really are a sick old man aren't you. I was being sarcastic about being a diesel engineer on top of all the other expert engineers you were. But geeze Cher, two postums later you stepped right into that. I am really glad the nice peoples at the physorg have the "Three-Minute-To-Take-Back-Something-Really-Stupid" rule.

When is your birthday Cher? I am going to by you the complete dvd series of the "Commander McBragg" cartoons.

May 27, 2016
Then stop bitching about oil and gas ruining your area.

"Diesel Engineer"? That is how you get my "lies", ira/otto, by deliberately distorting and perverting reality, and hammering on it forever. That makes them your lies, ira/otto.

Let's get back to how we are going to have good roads after everyone gets started on EV's. Your personal attacks are inappropriate for this forum.

May 27, 2016
@ Everybody. Here is some great big fun. These are a hoot and it only takes about 2 minutes to watch each one.

https://www.youtu...zLUvuLLU

https://www.youtu...IavBFVbs

https://www.youtu...oxM8hUMk

https://www.youtu...h5MoW0c0

https://www.youtu...DDIQIsSY

Now you peoples tell me the trut, who did they use when they came up with idea of "Commander McBragg", eh?

May 27, 2016
Considering the market penetration of EVs so far, and the manifest fairness of a mileage tax, I'd have to evaluate these taxes as typical transparent Libertardian chickensxxt.

May 27, 2016
Boy, that brought back some memories, @Ira.

May 27, 2016
Seriously ? These three "researchers", I use the term lightly, are actually having their, BS lame excuses for not wanting to pay for the roads that they are using, published and then also republished by sites like this one ??? I guess we know what you drive !!!

May 28, 2016
Anyone who works on a 9,000 hp diesel polluter has no credibility in this thread.

And if you think this road tax will not be a problem, you live in the past more than the future. Our California roads have not recovered from having three Republican governors. We need that tax money, and as a driver of an EV, I think it is only right we all pay our share.

May 28, 2016
The thread regards road taxes on electric vehicles. Folk not out of high school react with this:

"@ Everybody. Here is some great big fun. These are a hoot and it only takes about 2 minutes to watch each one.

https://www.youtu...zLUvuLLU"

Yeah, we need "hoots" for our roads, Ira.

Grow up.


May 28, 2016
If you think this is the far future, you are unaware:

http://climatesol...go-solar

May 29, 2016
I like it when the Diesel drivers get mad and vote my posts down. It verifies my opinion of their emotions overruling their rationality.

Since Diesels pollute so heavily, we should impose pollution taxes, to compensate for the damage they do to us. It is only fair, . . .


It's also VERY FAIR to help people who hardly get enough money to buy a Diesel car to get some "clean vehicle", then, but i hardly see anything worthy. Do you really think people enjoy polluting? The solution would be to make sure people can actually afford to use clean vehicle instead of smacking their head because they have no choice but to use diesel cars.
Or is it so tempting to kick poor people's ass?

May 29, 2016
Taxing drivers for the mileage driven is a fair solution


the manifest fairness of a mileage tax


Absolutely not. A fuel tax, a mileage tax, a congestion fee etc. is a tax on consumption which unfarily targets those who need to drive and cannot avoid paying - i.e. the working public - whereas the benefit from roads and transportation is reaped by everyone and especially those who don't need to pay for the fuel or mileage tax, because they themselves don't drive or can write off fuel as expenses.

Any tax on consumption tends to be a regressive tax because the poor people spend proportionally more of their income on basic spending like food and energy, which means they get taxed at a higher effective rate than the rich.

Road infrastructure should be funded from the general income tax and fuel, cars, or miles should not be taxed at all.

May 29, 2016
Ah, US tax policy, what a fertile ground for discussion that is. Many work off the books in the US. Thus some sort of sales or VAT tax is needed to include these people. Corporations contribute a surprising small amount of income tax to the coffers. So let's totally eliminate corporate taxes and the need to file. Tax dividends and capital gains at a higher rate. Perhaps corporate share buy backs should be taxed to encourage the corporations to pay dividends instead. OK the Conservative Libertarian in me shudders at the thought of more government data on me but how about ending the IRS and income tax and replacing them with a sales tax based on how much you spend each year. The more you spend the higher your sales tax rate. This would be a naturally graduated tax and serve to end our consumption based society which we need to do anyway.

May 29, 2016
I find myself agreeing with the last two posts from Eikka and MR166, except for no corporate taxes. They dodge them for the most part, but we need accountability. If we are so hard on corporations, why do they own us?.

May 29, 2016
I find myself agreeing with the last two posts from Eikka and MR166, except for no corporate taxes. They dodge them for the most part, but we need accountability. If we are so hard on corporations, why do they own us?.


Trying to get corporations to pay taxes is not too dissimilar to trying to enforce the drug laws with the exception that the corporations own the politicians. Thus if there are no corporate taxes there is one less reason for corporations to own a politician. Also if taxes are not considered in corporate planning, corporations will make better business decisions.

May 30, 2016
Many work off the books in the US. Thus some sort of sales or VAT tax is needed to include these people.


That's double-dipping on the working class to mildly inconvenience those who dodge income taxes. It would do less harm to drop the consumption tax entirely.

VAT/sales taxes have a compounding effect through the economy because they increase the cost of living at every stage of labor, which ends up multiplying the cost of products at the consumer end. When a farmer for example buys a TV for his own entertainment, he pays VAT, so he asks for more money for his produce, which increases the cost of food for the guys who sell TVs, who in turn have to ask more money.

The damage from VAT/sales taxes completely swamps any benefit for the society.

how about ending the IRS and income tax and replacing them with a sales tax based on how much you spend each year


It's also possible to buy off the books.

May 30, 2016
Eikka what is the difference between a VAT or a sales tax to the final consumer? Yes, VAT taxes are more hidden from view and as such not as apparent to the voters. Here in the US everyone thinks that it is only the corporations and the rich that are doing all of the cheating. But that is far from the case. The poor run their scams too, like working off the books and collecting various government benefits at the same time.

Jun 01, 2016
Eikka what is the difference between a VAT or a sales tax to the final consumer?


VAT is fundamentally the same thing, only a bit more bureaucratic because it's technically paid at every step along the way, but it's eliminated through bookkeeping and reporting except for the end consumer.

Retailers and businesses typically don't pay VAT when they purchase stuff for sale or for "internal" business use. They either simply don't pay it by purchasing through a permitted corporate account, or they write it off in their tax reports and pay less tax otherwise.

Only the private consumers - i.e. you and me and the working public pays VAT. The business-owning rich are driving on company cars, eating company lunch, wearing a suit that's written off as company expenses and therefore no VAT. It's technically illegal, but practically not because hey - you got to "represent the company" so the car or the suit or the lunch is a business expense.

Jun 01, 2016
"The business-owning rich are driving on company cars, eating company lunch, wearing a suit that's written off as company expenses and therefore no VAT."

I ask you, how fast would that all change if these items were not "Tax Deductible" by corporations due to the fact that there was no corporate income tax? Perhaps corporations should pay sales tax on everything even raw materials. Tax deductability is the root of many poor business decisions. Yes, the consumer will bear the brunt of this tax so lower personal income tax rates to make up the difference. A graduated sales tax could be much more inclusive at both ends of the economic spectrum.

Jun 01, 2016
"Perhaps corporations should pay sales tax on everything even raw materials."

OK I have to vote myself down on that statement. The plan is to get more corporations to move back to the US and a sales tax would most certainly drive them away. Corporations equal real employment and that is what is sorely needed in the US at this point.

Jun 01, 2016
Taxing drivers for the mileage driven is a fair solution
the manifest fairness of a mileage tax
Absolutely not. A fuel tax, a mileage tax, a congestion fee etc. is a tax on consumption which unfarily targets those who need to drive and cannot avoid paying - i.e. the working public - whereas the benefit from roads and transportation is reaped by everyone and especially those who don't need to pay for the fuel or mileage tax, because they themselves don't drive or can write off fuel as expenses.
You've gone outside the box; whether a tax is fair based on usage or not was not in the original question. The original question is how to impose such a usage tax fairly, not whether a usage tax is fair in the first place.

While I agree that imposing a usage tax may be (and usually is) unfair without adjustment, that is not the subject being discussed here.

Jun 01, 2016
But the point is real: I pay no gas tax or road tax for our EV, which is tax-subsidized, too
This is a lie. George kamburoff doesn't own an EV.
I see I got voted down by someone who works on a 9,000 hp stinking, clattering Diesel, polluting the entire area
You consistently get voted down by people who don't like lying cheating psychopaths.

Jun 01, 2016
If these taxes are for road maintenance, there should be a tax that's based on the weight of the vehicle and the number of miles driven each year which could be checked during annual inspections.

Jun 01, 2016
Yup, the weight of the vehicle should be considered. BTW do all the states have a mandated inspection?

Jun 01, 2016
I have lived in cities where a car is not needed and in the "Burbs" where I needed the roads to commute. In the cities I was plagued by crime and noisy neighbors. One needs to be able to sleep at night in order to hold a day time job. Should I have to be the only group paying a road tax on my commute because the cities are inhospitable to me? Should the non driving city residents assume some of the responsibility for the " Quality of Life " issues that cities create?

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