The Times and others, such as KFSM, have been hearing from owners of electric vehicles about a shocking increase in the annual cost of their car tags. A typical all-electric sedan is seeing an eight-fold increase, from $25 to $200, in the registration fee.
Oct. 1 is the date a new law takes effect that raised the tax on motor fuels but also imposed a new charge on electric vehicle owners. The theory was that EVs contribute to road damage but don’t contribute sufficiently to fuel tax revenue, a major source of road money.
The Arkansas Freeway Construction Department has been pushing for this tax since 2017, recognizing that electric vehicles will someday supplant a significant number of the vehicles powered by gas and diesel. It’s a “fairness” issue, Freeway Construction Director Scott Bennett has said.
I make fun of Bennett, whose proper title is director of the Arkansas Department of Transportation, for several reasons, chief among them that the enormous cost of rebuilding our interstates is heavily related to damage by interstate truckers, who don’t begin to shoulder their fair share. And the DOT loves to build freeways. One standard rule of thumb is that a single truck causes the same wear as 10,000 cars.
An increase in the fuel tax and a new wholesale tax on fuels will put the total tax on gasoline at 24.5 cents per gallon. Annual car tags cost from $17 to $25, based on weight, except for electric-powered vehicles. They’ll now pay $100 to $200.
When Gov. Asa Hutchinson went looking for highway money, the proposal that was approved will get its biggest income if voters renew a half-cent sales tax (two-thirds of $300 million raised overall) for highways. Remember that everybody pays this — owners of gas, diesel and electric cars and people with no vehicle at all. State highways will get $39 million from the new wholesale fuel tax, but remember that’s paid by 2.6 million gas and diesel vehicles, or about $15 per vehicle on average Another $2 million will come from the new levy on electric vehicles — $100 a year from each hybrid vehicle and $200 a year from each all-electric vehicle.
When the numbers were run there were 18,777 hybrids and 802 all-electric cars registered in the state.
Fair? Some electric vehicle owners have been complaining that they are being punished for going green and reducing pollutants. Fairness depends to some degree on how many miles you drive. Hybrid owners pay some fuel taxes, though a hybrid owner quoted in the KFSM story indicated her purchases were rare. An all-electric vehicle is somewhat easier to compare.
You have to do a lot of calculating and lot of time plugged in to a charger to put a lot of miles on an electric car in a year because of limited range. They tend to be favored for short-range use.
I’m conflicted on this story, but in a position to offer an illustration. The new registration fee was no surprise to me. I reported it when it was approved earlier in the year and took special note because my wife bought an electric car a year ago.
It so happens that the tag renewed before the new law took effect, so we got one more year at $25. Next year, it will octuple to $200.
She put less than 5,000 miles on the car in its first year, but let’s just generously say 5,000 was the number. A gas-powered sedan she’d considered as an option to the EV purchase gets an average 23 MPG, according to an Internet sample (29 highway, 20 city). Make it 25 MPG since she’s no speed demon. In the gas guzzler, she’d have been looking at 200 gallons of gas for the year. That’s almost $50 in taxes at the new rate. Add that to the $25 tag on that model car and you’re talking a $75 contribution to highway revenues from the carbon-burning sedan. Versus $200 for a clean and quiet EV. Fair?
Every experience will be different, of course. But my wife would have had to triple her driving (and spend 1,000 or more hours plugged in to do it) to be near parity from gas tax avoidance
Recouping something from electric vehicle owners makes sense. Given how few were affected, it’s no surprise the legislature imposed the EV charge without much debate.
As the share of the vehicle market increases for electrics (trucks are on the way and charging stations are multiplying around the state) lobbying pressure will emerge someday. And when the gas and diesel cars are gone (Scott Bennett probably laughs at this notion as he once did at the idea of driverless cars), there really will have to be more creative approaches to highway financing. If ARDOT’s penchant for continual expansion of freeways despite their failure at reducing congestion is a sign of the state’s forward thinking, it will be long after I’m gone.
In the meanwhile, 20,000 or so people will be getting car tag sticker shock in the months ahead.