States Look to Tax Electric Car Use

While the federal government offers large tax breaks to encourage the use of electric cars, some state governments are considering imposing new taxes on electric cars to help solve budget problems. One state is even looking at an electric car tax that would charge owners over 1.4 cents for every mile they drive.

The federal government currently offers income tax credits of up to $7,500 for the purchase of eco-friendly plug-in electric cars like the Nissan Leaf.

Individual states also offer tax breaks of as much as $5,000 for anyone who purchases an electric car. But some states, already faced with tight budgets, see electric cars as a threat to gas tax revenue. State gas taxes are typically used to pay for bridge and highway maintenance and repair. Long term, an increase in electric cars would result in a corresponding drop in gas tax revenue.

Oregon

The state of Oregon currently offers tax incentives of up to $1,500 for owners of electric cars. But a bill before the state legislature would charge plug-in electric car drivers up to 1.43 cents for each mile they drive in the state. The bill would require the Oregon Department of Transportation to find a way to electronically track electric cars and report the distance they travel. Drivers could apply for refunds for miles driven outside the state.

"It's a fairness issue," says Sen. Bruce Starr, a supporter of the bill. "They're not paying any gas tax. Everyone else is paying, why should they get a fair ride?"

Washington

The state of Washington has been among the most aggressive in the nation in planning for electric cars. Plug-in vehicles are exempt from the state motor vehicle sales and use taxes. Interstate 5 in Washington will be the site of a federally-funded project to build the nation's first "electric highway," called the West Coast Greenway, and U.S. Route 2 is being transformed into the country's first National Scenic Byway equipped with electric car charging stations.

At the same time, however, the state senate has recently passed a bill that would impose a $100-per-year tax on plug-in electric cars to make up for lost gas tax revenue.

"We recognize they're an important part of the future, but it needs to help pay its fair share," the bill's sponsor, Sen. Mary Margaret Haugen, says regarding plug-in electric cars.

Texas

In America's oil and gas capital, the state legislature has considered proposals to provide $4,000 to $5,000 in tax incentives for drivers who purchase eco-friendly plug-in electric cars. On the other hand, a bill has also been introduced to impose a Vehicle Miles Traveled (VMT) tax on electric cars. Drivers would have a choice of periodic check-ins for odometer readings, or the installation of an electronic tracking device that would record the miles driven by the electric car.

The bill is already raising privacy concerns over the provision to track the whereabouts of electric cars on Texas roads.