Electric car owners in Vermont received unexpected news this January: a new $178 annual registration fee for their vehicles, double the cost of registering traditional combustion engine vehicles. Vermont became the latest state to impose such fees, joining at least 39 others across the United States. These fees, designed to address declining revenue from gasoline taxes, are growing in popularity as more electric vehicles (EVs) hit the roads. Hawaii and Texas, for instance, charge $50 and $200, respectively, in annual EV fees, reflecting a broader trend.
The introduction of these fees is part of a larger effort to make up for lost revenue from gasoline taxes, which EV owners don’t pay. As vehicles with internal combustion engines become more efficient, the federal gasoline tax remains stuck at 18.4 cents per gallon, unchanged since 1993. As a result, revenue for infrastructure projects like road maintenance and construction has dwindled. The Highway Trust Fund, financed by gasoline taxes, may run out of money by 2027, prompting calls for new funding sources, including EV fees.
Environmentalists Concerned About Excessive Fees
While environmentalists and consumer groups agree that EV owners should contribute to road maintenance, they worry that Republican lawmakers might set fees too high, targeting liberal EV owners unfairly. In some states like Texas, EV fees have been criticized for being punitive, often much higher than what gas vehicle owners pay. Some argue that these fees place a disproportionate burden on low-income drivers, making it harder for them to afford cleaner vehicles.
The decline in revenue from gasoline taxes is largely due to improvements in fuel efficiency. Politicians have been reluctant to raise fuel taxes to keep up with inflation, leading to a shortfall in funding for transportation infrastructure. In response, lawmakers are exploring alternative revenue streams, such as charging EV owners a fee. However, some critics argue that EV fees are being used as a convenient scapegoat, even though they represent only about 2% of vehicles on U.S. roads, according to the Alliance for Automotive Innovation.
Differing Approaches in Red and Blue States
Some states with Republican leadership, like Texas and Wyoming, impose some of the highest EV fees, typically $200 per year. Texas state senator Robert Nichols, who sponsored the 2023 legislation to introduce the fee, defends the measure, emphasizing that everyone, including EV owners, should pay for road maintenance. However, Consumer Reports criticizes Texas’ relatively low gasoline tax and the disproportionate EV fees. In contrast, states with higher gasoline taxes, like New Jersey and Washington, have also introduced EV fees, demonstrating that the issue crosses political lines.
Vermont’s new $178 fee is designed to address growing EV adoption in the state. With electric vehicles accounting for 12% of new car sales in Vermont, state officials are concerned about the financial impact on infrastructure funding. To make the system fairer, Vermont plans to implement a mileage-based fee by 2026. This system would charge EV owners based on their actual road use, a method that could replace flat fees and potentially address issues like fairness and privacy. However, the technology to track mileage is costly and complicated, and some states have yet to develop such systems.