Taxing Electric Cars

Law makers in Washington State will soon be voting on a bill that will require electric car owners to pay an annual flat fee of $100. The bill was recently moved into House after a passed vote in the state Senate, and if passed, will be the United States first electric car fee. Currently, the state offers tax breaks to all those who purchase electric vehicles as part of the states program to incentivize electric cars. In Washington, the government receives a sale tax of 37.5 cents per gallon of gas, and at the same time, waives all sales taxes of electric cars. However, because of the declining purchases of gas, the state government is facing a $5 billion dollar deficit. The flat fee of $100 would be funding the vital road maintenance projects the state has had to cut spending for. On the other hand, some residents and law makers would like the fee to be a reflection of how much each electric car owner drives. The “user fee” would “consider a price based on odometer readings that owners would self-report each year”. If the bill is passed, profits are said to reach $376,000 in the first year.

From my understanding, Washington state does not want the fee of $100 to take away the incentive to buy electric cars. This could be a real major point of resistance in getting the bill passed. However, I think that the flat fee may encourage people to drive more than they would before because there would be no incentive to drive less. I think that the flat fee ultimately cause rebound effect, more people driving more because there are no consequences to driving more miles. A user-fee, that would charge people by the mile, would be more effective environmentally and economically because it would reward those who do not drive as much and charge more to those who drive a lot.

--Karen Zeiter