New Tax Would Penalize Electric Cars For Not Using Gas

CBO report finds basis for vehicle miles travelled tax using GPS technology, write Jerry Edgerton

Published: 30-Mar-2011

Here’s another entry for the no-good-deed-goes-unpunished file: Environmentally conscious drivers may soon get hit with a charge to make up for the gas that they’re not using.

Aiming to cut use of gasoline and dependence on foreign oil, the federal government gives you a $7,500 tax credit if you buy a new electric car. Various states add their own tax credits ranging up to $5,000. So far, so good. But now state and federal proposals would penalize electric cars for not paying gasoline tax, by imposing a tax on the miles they travel. And here’s a hackle-raising detail: to make it work, states would have to track your mileage with a mandatory GPS device on the car.

The cost of highway and other transportation expenses are (partially) offset by gasoline taxes — an 18.4 cents per gallon federal levy and widely varying rates at the state level. (Check the rate in your state). The federal tax, unchanged since 1993, already has fallen short of financing the federal highway trust fund, with $19. 5 billion transferred from general revenues this year. And revenues may continue to decline: Federal regulations require vehicles to average 35.5 mpg by 2016, which has already cut into gas tax revenue. (See What You’ll Be Driving in 2016).

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