I heard on the news that Indiana lawmakers are proposing a tax on hybrid vehicles. Apparently they feel since hybrids are getting better mileage they are not paying their fair share of gasoline taxes to support road maintenance.

Lets see...they want you to be more fuel efficient, you pay more for the vehicle up front which means you are paying more sales tax on the purchase of the vehicle. You have possible higher maintenance costs for the repair of the vehicle. Many gasoline only vehicles are close to the same mileage now. Sounds like discrimination for purchasing a fuel efficient vehicle to me.

The government just has to think of any possible way to bleed money from those of us who are trying to save a penny here and there so we can make ends meet. I have a 70 mile daily commute and the hybrid has saved me a lot of money with the wife and I car pooling to work. Went from about 6 gallons a day to 2 gallons a day. I am still paying my taxes on the fuel I use so why should I be penalized for being fuel and environmentally friendly?

Thoughts everyone?

 

Devil's advocate...
Let's assume the cost of maintaining the bridges and roads are $100 million for a state (just guessing). The state and it's citizenry decide the best way to share the cost of maintenance is through a gas tax. It's easy to administer and collect, the people need not file forms, etc., and the cost of maintenance is shared by those that use the roads in proportion to how much they use it. The gas tax requires no additional costs to collect. If someone drives twice as many miles as the average driver, in theory, he pays twice as much. It's also local, so that every driver in the region shares the burden. Even if granny never uses the highway, a trucker delivering produce to her market will pass on the cost of the gas tax to her in the form of higher grocery cost, so she, in effect, still pays for the benefit of the highway.
It's the fairest tax of them all...without a doubt, since its the only tax that is directly tied to the benefit it provides, there's no redistribution nor progressive scale involved.
Let's assume this delicate equilibrium successfully covers the highway maintenance cost every year, so there is no need for the state's treasury to pay for maintenance, we'd argue that this is a perfect scenario, the users of a product are paying for their share of the cost in proportion to how much they consume.
Now, lets assume everyone in the state buys a Tesla (unlike the Volt or Leaf, the car is 100% electric, no gas engine). The cost of maintaining the highways is still the same, but the gas tax revenue to the state is now zero. Obviously, this is a problem. Yes, all the citizens did the "right thing", but now who is going to pay for the road's maintenance, repairs, improvements, etc.?
IMHO, the fairest way to share the cost of maintenance is through the gas tax.
The alternatives are either ...

• a toll which discriminates against highway drivers, gives a free pass to local drivers and it is very expensive to build and maintain with very high labor cost (I'd guess up to half the toll revenue goes to collection...very inefficient)
• through the treasury via income tax, where the wealthy will pay disproportionately more and lower income drivers will pay little or nothing (without the cost being proportionately shared based on usage)
• sales taxes which has a negative impact on merchants, is easy to avoid, via internet purchases, or evade, through cash transactions, and disproportionately affects the poor.

I hate taxes as much as the next guy, but, the gas tax is extremely fair. Yes, hybrid owners feel, that they are doing the "right thing" and might feel that they are being wrongly penalized, but how do states recoup the loss of revenue (in your case about a dollar a day) due to efficiency?
A hybrid driving the road inflicts the same wear and tear as a gas guzzler, so why should the fuel sipper pay less for the repairs?

I'm a free market libertarian, I believe in a flat tax, I believe government is way too big...but in this case I have to side with the tax man. Pick your poison...tolls, sales tax, income tax or gas tax. Only one efficiently fairly marries the cost with the usage.
One final advantage of the gas tax is it is free from political corruption, since it sits in a dedicated pool for a specific purpose, the roads. If you lump the cost onto the income tax, other government spending could interfere with the maintenance program. We have enough nonsense spending through the tax code, let's keep a dedicated revenue, such as the gas tax, free from other influences.


The equivalent mileage are not in the same class. A hybrid version of a model will always show better mileage than the gas version. You also brought up the higher sales tax on purchase, but that is general revenue to the state and not dedicated to the roads. Hybrids might have lower maintenance cost (brakes). Final rebuttal to your post, yes, you paid mor for the vehicle, but in most cases you can recoup some,or all of that premium, in higher resale value.

 

On another forum I saw this issue reported for Virginia. See this link to the news article.

I think the basic issue is that the lawmakers do not understand the difference between a true hybrid and an electric vehicle. In fact some hybrid owners don't even understand it. The key point is that ALL energy for a hybrid is derived from the gasoline you buy. So hybrid owners buy gas just like conventional car owners. If they want to play the game that hybrids are more efficient so the gas tax is not fair, that is regressive. You are taking away the incentive to drive a more fuel efficient car. My view is that the fair way to deal with it is to increase the gas tax. Everyone is still using the roads so you need money to do maintenance. Yes the burden is slightly shifted to those who are consuming more gas, but so it should be.

Electric vehicles are a totally different kettle of fish. In my view these drivers are ECO Freeloaders. Their "fuel" comes from electricity. In many jurisdictions electricity is considered an essential for life and may even be subsidized. So there is in fact a negative tax. And nothing goes from the sale of electricity to maintain the roads. It is totally fair to include a fee or road tax with the annual renewal of an electric vehicle registration. They use the roads like everyone else and need to pay for the maintenance.

I would suggest the politicians do not understand the difference between hybrids and electric vehicles. And further electric vehicle owners who are freeloading are not going to tell anyone. This means hybrid owners do need to protest and educate the politicians. The hybrid is simply a more efficient gasoline vehicle. The electric vehicle is the true freeloader and does need to be taxed.

I've heard of nothing like this in Canada, and hope it never rears it's head. But EV owners are getting a free ride here, so it probably will come to light at some point.

 

I fail to see the difference between an electric car which uses no gas and a hybrid which uses very little gas (relatively speaking). Both are using the road and are getting a free (in the case of electric) or less expensive (in the case of hybrids) ride.
If you see the electric is a true freeloader, then why isn't the hybrid a partial freeloader?
Not trying to be difficult here, but if all drivers go electric, gas tax goes to zero. If all drivers go hybrid, gas tax goes way down, but the net effect is the same. The efficiency of the vehicle is bringing in less revenue than is needed to maintain the roads, so they need to make it up somehow.
Raising the gas tax, to make up for the shortfall burdens the gas drivers at the expense of the freeloading (electric car) and efficient (hybrid). This is burden shifting (much like the disaster that our current tax code is) and unfair. Irrespective of vehicle the burden should be shared equally and proportionally in relation to usage....IMHO
The us versus them mentality currently has people who pay no taxes complaining that people who pay 50% aren't paying enough.

 

That is the way the lawmakers are looking at it, and I would suggest it is totally wrong. Why?

The true hybrid like a Camry is a totally gasoline driven car. The only energy it gets is when you go to a gas pump and buy gas (which includes road tax). Gasoline is a valuable resource and minimizing the use of it is good. There are less emissions and our fossil resources lasts longer. If everyone buys a hybrid that is good. Yes, the gasoline tax for road building will have to go up, but there is nothing wrong with that. You have to pay for the roads.

A hybrid is just a fuel efficient gasoline vehicle. If you tax a hybrid, then you should be taxing any vehicle that gets over 30 mpg for example. When the government is using legislation like CAFE to reduce average fuel efficiency, this makes no sense.

An EV uses no gasoline. No road tax is paid. They are total freeloaders when it comes to road maintenance. And worse still many of them think their fellow condo owners where there is no separate power metering or their employers should share their car charging costs. And the government frequently subsidizes electricity. As an extreme example in the Province of Ontario, the government pays "farmers" $800 a megawatt hour to supply solar generated electricity. That same power could be generated for $40 at a clean coal plant. Ontario sells their power (at my last recollection) for about $50 a megawatt hour. The bottom line is they are totally avoiding payment of money to support the roads. Electricity for driving has to be taxed just like gasoline is taxed. Finding a fair and reasonable way to do it is a problem. Probably an additional annual tax for having an electric car is about the only way.

Also auto makers should not be able to use electric vehicles to reduce their average fuel consumption under laws like CAFE. This ignores that they use electricity which has its own set of issues and pollution factors. CAFE should be limited to gasoline only vehicles, which includes the hybrids.

 

Playing the devil's advocate from the "other" side, will they tax diesel cars more because they get better mileage? How about my dear old Mustang that gets around 15mpg if I get into it a lot, will I get a discount for using more?

The only "fair" way is to charge a fee that would be added to the tag fee based on a stepped cost structure depending on the mpg of the car. That will mean increased taxes though because you will still need to keep the gas tax to milk out of state drivers and get some "free" money for them to spend.

 

Another idea would be to put a road tax on the electricity bill of an EV owner when they register or renew the registration of their vehicle. Yes, they will whine that they should not pay tax on electricity not used in their vehicle. Tell them that we should not pay road tax on gasoline we use in our lawn mower, so it evens up!!

 

It's a rat's nest any way they implement the "efficiency" tax.
I guess it's too difficult to do it on an ala carte basis (take the car's rated MPG and figure an annual usage fee tax). I can see it now, a class action lawsuit against the state when a car rated at 30 MPG is taxed at a set rate, but driver gets only 28 MPG in real world driving. The lawyers will love this one. Administering it would be a nightmare.
Given the current administration's love affair with electric vehicles, they'll never do anything to hasten the demise of this 'destined to fail' industry (my guess is it will be deemed a major success if electric cars survive until after the next presidential election).
So the real question is, what is the easiest way to capture an efficiency tax?
Since it's easiest to segregate the hybrids from the population and by the very nature of the fact that they're more efficient than their gas twins, it's an easy sell.
It's not fair to say the Yaris is more efficient than the Land Cruiser, since they're not equivalent vehicles. It'd be a difficult sell to the masses. It would make selling high mileage cars (which are usually LESS expensive) more difficult.
However, it's easy to sell the populace on an efficiency tax when the gas Camry (25MPG) and the hybrid Camry (35MPG) are essentially identical and people can easily understand the reason for the fee. (Since the higher mileage version is MORE expensive, the fee would only add marginally to the premium)
Administration would be pretty easy since the car is either hybrid or it's not.
One other aspect, I'll call it the low hanging fruit theory...hybrid owners are relatively affluent, that is, they voluntarily overpaid ~$2500-3500 for their car. Before someone argues that they'll get the money back and turn a profit in 4 years, the fact is less affluent people can't make the upfront payment. As such, this demographic wont squeal as loudly, they'll (for the most part) just see the higher fee and pay it (notwithstanding the folks complaining here).
Again, I don't like it, but I understand it and from a practical purpose, it makes sense.

 

Actually this whole thing is kind of funny considering I got $2600 tax break when I originally purchased my hybrid, there are new regulations mandating higher MPG on all future cars and there were many proposals to tax carbon, to force people to use less oil products (me think some type of this law is in effect in Europe). I mean I hope we all agree that using less fuel is good for everybody (less oil import from middle east, slower global warming etc etc) , so why not punish those that actually are trying to do some good. Lack of sense of direction, lack of leadership and very poor judgement is all I can see here, so business as usual.

 

...government, at its best!
A bungling bureaucracy meddling and micromanaging individual decisisions all for "the greater good", not realizing that, at every step of the way, they create far more problems than they solve.