It’s no secret the country has been buying and using more and more electric vehicles over the last few years. The increased popularity of hybrid and electric vehicles alike is taking a serious toll on the tax revenue collected across the country by states. This is because, without the use of gas, the state governments cannot collect the tax on gas, which is leading states to begin planning to take other measures to collect tax revenue from citizens using their vehicles.
How Are States Tracking Miles?
This year, 8 states considered a bill that would modify existing programs or set up new programs that would tax drivers who are using electric vehicles. Hawaii, Massachusetts, Minnesota, Tennessee, Utah, Vermont, Virginia, and Washington are among the 8 states that have considered this new initiative. The National Conference of State Legislatures, which is tracking the issue, says these programs will tax electric vehicle drivers based on the miles they drive.
There are some current programs already out there, such as some states installing devices directly into the vehicles to be able to track miles driven, other states track miles through year-over-year odometer readings when drivers renew their registrations, and some just rely on drivers to report the miles they’ve driven.
Why?
Without a change in formula, the country’s revenue from current federal and state gas taxes will fail to meet the nation’s infrastructure needs. A projection put forth by the Congressional Budget Office states that if the 18.4-cent per gallon federal tax remains the same, and infrastructure spending increases at the average projected rate of inflation, the country’s highway trust fund will be about $140 billion short by 2023.
Wrap Up
Despite these recent projections as well as the increased popularity of electric vehicles, Carl Davis, a research director at the Institute of Taxation and Economic Policy, said replacing the fuel taxes with a mileage tax is “still a ways off.”