Federal EV Surcharge Thought Not Useless But and Now Contains Hybrids
The U.S. Congress isn’t done going after electric vehicles after slashing federal incentives for consumers to buy them and for automakers to make them last year. While looking for as much as $550 billion for a new infrastructure funding bill, the representative in charge of the House Transportation Committee still wants to add a tax for drivers who don’t buy gas at all—and maybe even some who just use less.
Chair of the House Transportation and Infrastructure Committee, Rep. Sam Graves (R-Tarkio) from Missouri’s 6th District, said at a U.S. Chamber of Commerce infrastructure event this week that he plans to put forward a multi-year bill next month that includes a $250 annual tax for EV drivers and a $100 one for hybrids, according to JP.
The surcharge for hybrids is new, though, and it’s unclear if the target is plug-in hybrids that now have a usable range for daily commutes if drivers regularly plug them in (which has been hotly contested), or if it’s all hybrid vehicles like the non-PHEV Toyota Prius or Honda CR-V Hybrid. The latter two are the models consumers have been flocking to this year if they are looking for better fuel economy but are not yet ready for a fully electric vehicle.
According to Tax Foundation, as of last August, most states add a registration surcharge for EVs since, in addition to not paying the federal gas tax every time they refuel, they also don’t pay state gas taxes. Revenue from both of those theoretically go toward local, state and federal transportation projects, but historically, the majority goes to highway improvements and maintenance. It hasn’t always worked to cover ongoing repairs since Congress hasn’t voted to raise the federal tax since 1993, and it isn’t tied to inflation.
The timing of any discussion of an additional annual tax for hybrid and EV drivers comes at a strange time. Many consumers are looking for vehicles that use less or no gas at all because of the rapid rise in fuel prices since the U.S. military action in Iran. That action has caused oil prices to surge, and now the national average for a gallon of regular gas is $3.72 as of this writing, compared to $2.92 a year ago, according to AAA. Drivers in Arizona and New Mexico have been particularly affected with prices jumping roughly 40 cents week-over-week, according to GasBuddy.
It’s even more peculiar that some politicians are looking to suspend gas taxes for temporary relief from soaring fuel prices, such as in California where the tax is 61 cents per gallon, and gasoline now averages about $5.50 per gallon of regular. But the state imposes an annual registration surcharge on EVs.
It’s no secret the White House and Congressional Republicans have targeted EVs in the last year by gutting tax incentives for consumers, slashing fuel economy targets by promoting gas-powered vehicles and, most recently, making it almost impossible to access $5 billion in National Electric Vehicle Infrastructure funds by adding a domestic content requirement. A $250 annual fee is even less than the $1,000 some Republicans proposed last year before the $7,500 tax credit was axed.