Personal transportation is undergoing drastic changes. With advances in fuel efficiency technology, including fully electric and hybrid cars, many drivers are using less fuel than they used to.
That is a good thing for the environment, and for Iowans’ pocketbooks. However, it also presents a challenge to the traditional model of infrastructure funding.
Iowa’s statewide fuel tax is expected to generate $656 million this fiscal year, almost half of the road use tax fund. People who only drive electric vehicles will pay $0 in fuel taxes.
A bill under consideration in the Iowa Legislature would impose new registration requirements and taxes on people who operate electric cars, a move meant to ensure electric car drivers share the burden of building and maintaining the roads they drive on.
House FIle 725 would charge electric vehicle operators an annual fee, impose a small per-kilowatt-hour tax on non-residential charging and also tax hydrogen fuel, as recommended by the Iowa Department of Transportation. The bill was approved by an Iowa House committee last week.
We are open to the idea, but worried it may be premature.
Electric vehicles reduced revenue to the state’s road use tax fund by an estimated $317,000 last year, according to an Iowa Department of Transportation report. That figure is projected to increase to about $500,000 in 2020, and forecasters say it could be anywhere from $40 million to $241 million by 2040, depending on the prevalence of electric vehicles.
The legislation is opposed by lobbyists for ChargePoint, a California-based company that builds and operates electric car charging stations, including those available at various locations in Cedar Rapids and Iowa City. Local governments that operate free-to-use charging stations are also concerned about the proposed tax.
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The driving concern behind this bill - that electric car drivers should pay a fair share into the infrastructure budget - is entirely legitimate. In fact, that trend toward higher fuel efficiency could soon necessitate a much broader discussion about the way we fund road projects.
For now, though, it’s worth remembering electric vehicles are usually lightweight, and often not designed for long highway trips. It’s not obvious that the relatively small number of electric vehicles on the road in Iowa today are responsible for an undue share wear and tear on the state’s infrastructure.
Instead of rushing to tax electric vehicles, the state should continue to track their adoption, and attempt to estimate the real infrastructure upkeep costs associated with electric vehicles.
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