Oregon Proposes Per Mile EV Tax

Despite the fact that electric vehicles and plug-in electric vehicles make up a miniscule fraction of cars on the road today, government entities are already planning for the financial implications of a time when they reach critical mass.  At some point in the future, states will realize dwindling tax revenues from gasoline sales. And probably, the thinking is – better to get something in place now, while it affects only a few EV motorists, rather than meet the resistance of a possible majority in years to come.

The state of Oregon introduced a bill which passed the House Transportation and Economic Development Committee on April 4th, which proposes to charge drivers of electric vehicles and plug-in electric vehicles $0.0143 per mile, starting in 2014. It’s reasonable that drivers of EV’s are taxed to some extent – after all, they are road users too, and that infrastructure has to be paid for. But is the proposed new tax for EV drivers a good deal compared with taxes other motorists are paying?

Currently, Oregon’s motorists pay $0.30 per gallon to the state as well as an additional amount to individual cities of about, on average, $0.03 per gallon. To make the analysis fair, the $0.184 per gallon which goes to the federal government can be discounted, as the state of Oregon does not collect this.

According to the EPA, the average motorist drives 12,000 miles a year, which translates to about 33 miles a day – well within the scope of any electric vehicle’s range. In order to compare taxes paid by the driver of a conventional economical car, something like the Honda Fit, which gets a combined driving average of 31 mpg, would be a reasonable choice. The Honda, in 12,000 miles, will consume 387 gallons, that will be taxed at 33 cents a gallon. So comparing an EV with the Honda Fit, this is how the numbers run:-

EV tax per year: 12,000 miles x $0.0143/mile = $171.60
Gasoline tax per year: 387 gallons x $0.33/gallon = $127.71

Looks like EV drivers will pay higher taxes, but Oregon assumes the average car today is only getting 21 mpg – so it’s the gas tax revenue on less efficient vehicles that it’s trying to protect. Nevertheless, 2016 CAFE standards will require cars get 34 mpg (even better than the Honda Fit I used above), so shouldn’t the state be using that mileage as the basis for levying an EV tax? Especially since EVs will still only be a small fraction of sales by then?

Then again, maybe this is not such a big deal. Actually it’s probably a good deal. Whether owning a gasoline or electric vehicle, the state of Oregon is charging less than a couple of hundred bucks for the privilege of driving 12,000 miles on roads it must maintain. That doesn’t sound so bad. Either way, the implementation of this tax raises lots of interesting questions: Is per mile taxation a good basis for taxing EVs? Would a flat tax be better? Should governments tax them at all while this technology is getting established? (eg is this analogous to not charging sales tax for internet sales?) It would great to hear what people think about this.

Phil Covington holds an MBA in Sustainable Management from Presidio Graduate School. In the past, he spent 16 years in the freight transportation and logistics industry. Today, Phil's writing focuses on transportation, forestry, technology and matters of sustainability in business.

8 responses

  1. I disagree with this tax. This tax will just get people to buy gas vehicles rather than EVs. It is more payback for people trying to get away from the oil companies. If Oregon balanced their budget properly they wouldn’t have to tax EVs or GVs that high.

  2. I agree that the tax is premature. The truth is that eventually it’ll make sense to tax electric vehicles somewhat to pay for roads – that’s only fair. But I think we’re still 10 years away or mote from needing this!

  3. It seems that flat tax is fairer than model they suggest to enforce now. I understand that income taxes of gasoline vehicles may and will decrease rapidly after certain period of time. The solution can be to equalize incomes and spending in the budget of public finances. Well, we will see if the governments can be flexible enough in their future decisions.

  4. Although I don’t own an electic car I believe that there should be no tax on them because the government should encourage any transportation that does not use oil.

  5. As the editor of ArchitectureWeek and a proud Oregonian, I am sad and embarrassed that my state is leading a push in this misguided direction.

    The huge, giant, tremendous thing that has been missing from discussion relates to this common assumption:

    “after all, they are road users too, and that infrastructure has to be paid for…”

    Here’s the thing. The rule of thumb among civil engineers, roughly accurate, is that roadway damage – the main wear and tear from driving – goes by the fourth power of the axle loading.

    To work this through, at the Oregon DOT truck load limit, representing a fully loaded truck at 80,000 pounds gross, the axle loading can be 20,000 pounds. With a curb weight of about 3500 pounds, a generous estimate of a four-passenger electric sedan might have an axle loading as high as 2000 pounds.

    The ratio of axle loading between truck and car is 20,000:2,000, or 10:1.

    The ratio of road wear per mile between truck and car is 20,000^4:2,000^4, or 1.6e+17:1.6e+13, or 10,000:1.

    Yes, that is ten thousand to one.

    In other words, each fully loaded semi-trailer truck causes road wear per mile, as about 10,000 electric cars per mile.

    It appears that the dirty secret is passenger cars already very, very heavily subsidize the road wear caused by heavy trucks.

    Life-cycle costing and carbon-costing of roadway systems may show that reducing maximum vehicle weights – which are huge in the US compared to many other wealthy countries – can be a significant source of economical carbon savings across the system. And on local roads, where institutional vehicles (government, transit, and utilities) may be a large share of the heavy vehicles, this solution may be pursued voluntarily.

    In the case of the mileage tax for electric cars, we’re not just looking at something badly regressive in terms of important shared objectives – it looks a lot like an attempt to perpetuate a hugely unfair and deceptive highway funding model onto a new, undeserving generation.

  6. During his first  term in office Governor Kitzhaber attempted to levy the per mile tax on all cars. Kitzhaber is a member of the highest paid profession in the nation and disconnected from the middle and lower classes. Oregon already collects the sixth highest gas tax in the nation, Discounting Hawaii and Alaska it has the second highest gas prices in the nation as of yesterday. Missing in the 12,000 mile average driven per driver equation is the demographics of the state. Oregon is divided down the middle by the Cascade range.  The east side is dotted by smaller rural towns and is agricultural. The average miles driven on the east side is probably three times that of the west side and the east side is depressed economically.  What was Oregon’s gas tax revenue for 2011 and how much is in their highway fund? Otherwise, since Oregon has the 6th highest gas tax nationally already does it really need to expand it’s gas tax revenue?

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