A tax on electric vehicles? Surely not!

Georgia, my home state, recently passed HB170, the Transportation Funding Act of 2015. The bill, which was signed by Governor Nathan Deal in May, took effect on July 1, creating new sources of funding for road and bridge repairs. Georgia motorists are now paying a 26-cent-per-gallon excise tax at the pump.

Like most states, Georgia’s transportation infrastructure is a hot mess. Our roads and bridges are in need of immediate attention, and I initially applauded our elected officials for being uncharacteristically courageous, mentally preparing for higher fuel bills with a pretty positive attitude. I quickly became disillusioned, however, when I learned about one of the new sources of funding specified in the law.

Not only does the Act remove the state’s $5,000 tax credit for zero-emission vehicles, it creates a new annual alternative fuel vehicle fee for all vehicles that operate solely on electricity, as well as all plug-in hybrid electric or flex fuel vehicles registered with an alternative fuel vehicle license plate (allowing them to legally drive in Atlanta’s HOV lanes). When Georgia EV and (some) flex fuel owners go to renew their tags, they’ll be slapped with a $200 fee, in addition to any other tag fees or ad valorem taxes they owe.

Responding to my unhappy email on the matter, Representative Chuck Hufstetler wrote that while he didn’t vote for HB170 (he was absent that day), he could shed some light on the majority’s logic, explaining, “Since gasoline taxes are paying for the maintenance of our highways, alternative vehicle owners are not paying anything towards the maintenance of the roads. Therefore they felt that a fee equal to that should be assessed on these vehicles.”

Really?!

Because EV drivers aren’t paying their fair share at the pump, let’s slap them with a fine calculated on the assumption that they drive an average of 24,000 miles each year (more than double the national average), and let’s completely ignore the reason for the state’s EV tax credit when it was passed in 1998: metro Atlanta had been in violation of federal air quality standards for two decades. We needed people to buy these more expensive vehicles because we were looking up at a rapidly expanding hole in the ozone.

Now, after 17 years, with one of the most generous EV credits in the nation, metro Atlanta has the highest U.S. market share for plug-in vehicles … but not for long. A local Nissan dealer was quoted in the Atlanta Journal-Constitution, saying that he expected “a 70% decline in Leaf sales after the new law takes effect.”

So Georgia is choosing infrastructure over clean air … or is it?

Even with more EVs on the road, Atlanta still doesn’t meet the federal standards for ozone and fine particulate matter. And while traffic is definitely a leading culprit, natural weather conditions (it’s currently hotter than blazes here), geography (can you say sprawl?), industries and power plants also play a role.

And what powers GA’s EVs? Well, coal is still one of the primary sources of electricity generated in Georgia.

Because of this, the environmental impact of EVs has been receiving more scrutiny. A recent national study, published by a group of economists, compared gasoline tailpipe to electricity generation emissions at the county level, and found that gasoline cars likely cause less environmental harm than electric vehicles in many parts of the country. In fact, their subsidy map (below) shows that when all damages are considered, only 12 states warrant a subsidy rather than a tax.

A recent study concludes that only 12 states should offer EV subsidies.

A study by Stephen Holland, et al., concludes that EV subsidies are only warranted in 12 states.

That’s a shocking pronouncement. But enacting an EV tax in all of those states because of their current electric generation portfolio would be incredibly short-sighted.

Utilities like Duke and Consumers Energy are aggressively dismantling their coal-fired power plants, replacing them with (primarily) natural gas generation. And Georgia Power has been aggressively developing utility scale solar and has just launched a solar sales and installation service for its customers to encourage more distributed solar generation.

The map above reflects the status quo, but electricity generation is changing, and we shouldn’t let a short-term mentality (e.g., “we need more infrastructure funding”) create disincentives for electric vehicles (or other sustainable products or initiatives), which should be part of the long-term solution.

Study and map: Holland, S., Mansur, E., Muller, N., & Yates, A. (2015). Environmental benefits from driving electric vehicles? National Bureau of Economic Research. doi:10.3386/w21291

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July 15, 2015

About the Author

Lee Ann Head

Lee Ann Head

Lee Ann is a former contributor to Shelton Insights.

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