Texas expected to enact $200-per-year tax on EV owners

The Texas state house unanimously voted (145-0) to pass a bill that will impose a $200 annual fee on EV owners. The bill is now on the desk of Governor Greg Abbott, who is expected to sign it into law.

The rationale for taxing EVs is that, unlike legacy vehicles, EVs pay no gas taxes, which provide part of the funding for road maintenance.

As EV advocates reliably point out, there are several weak points to this argument.

A Consumer Reports study found that the average ICE vehicle only pays $71 in tax per year.

The amount of gas tax paid depends on the number of miles traveled and the efficiency of a vehicle—burn more gas, pay more tax. EV taxes are indiscriminate—the driver of a Nissan Leaf who drives a small number of miles each year will pay the same as someone who makes cross-country trips in a Hummer EV.

According to the Dallas Morning News, gas taxes currently make up 29% of Texas’s highway funds. Texas charges 20 cents per gallon in gas tax—this is one of the lowest rates in the country, and it hasn’t been raised since 1991. The federal government adds 18.4 cents per gallon (28.4 for diesel). This rate hasn’t been raised since 1993, although inflation between 1993 and 2022 amounted to 93%. Unlike gas taxes, some state EV taxes (not Texas’s, apparently) are indexed to inflation, or increase at a fixed rate each year.

Fair or not, Texas’s new tax is not at all unprecedented. According to the National Conference of State Legislatures, 32 states currently assess a special annual tax on EVs (in addition to the annual registration fee charged for all vehicles). These taxes (or fees, if you prefer) are assessed even in EV-friendly states such as California ($108, increasing each year), Washington ($150 for an EV, $75 for a hybrid) and Oregon ($110). Several states, including Alabama and Georgia, charge $200 a year. In 2021, a proposed Florida law that would have imposed an EV tax failed to pass the legislature.

Have Republicans finally found a tax that they like? Well, as Ronald Reagan said, “If you want more of something, subsidize it; if you want less of something, tax it.”

Sources: Dallas Morning News via CarBuzz, CleanTechnica

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