Senate Republicans Propose $1000 EV Tax to Pay for Road Repair
For years now, electric vehicles owners in the United States have been eligible to receive tax breaks for choosing the gas-free option, with federal, state, and even local governments subsidizing anywhere from $4000–$10,000 or more of the cost of a new or used EV depending on region, make and model. However, a group of Republican members of the U.S. Senate believe the window of financial opportunity for EV owners should close sooner rather than later, according to a new piece of proposed legislation.
Introduced by Senator John Barrasso (R-WY) on Wednesday, the proposed legislation focuses on repealing the current $7500 federal tax credit on approved new EVs, killing the $4000 tax break on used EVs, ending federal investment credits for EV charging stations, and terminating credits extended to those who lease EVs. Barrasso is backed by 14 other GOP senators, including Senate Majority Leader John Thune (R-SD), who want to end the sweeping subsidies within 30 days of the bill becoming law.
But it's not just closing the flow of tax credits on these senators' minds. Going forward, EV owners would be charged a one-time $1000 fee at purchase under the proposed rules.
Senator Deb Fischer (R-NE) explained that this fee would recoup around 10 years' worth of federal gas tax revenue per car. Federal gas taxes, which were first imposed under the Hoover administration in 1932, are almost exclusively used to maintain and repair roads. The same is true for many states around the country — which poses a future funding problem for transportation agencies as EV adoption increases and gas tax revenue decreases.
"EVs can weigh up to three times as much as gas-powered cars, creating more wear and tear on our roads and bridges," Fischer said.
Indeed, equivalent EVs usually do weigh more than their gasoline counterparts due to the mass of their battery packs, raising questions about the long-term effects on America's driving infrastructure. However, the wear-and-tear aspects of road use as it relates to EVs have yet to be studied on a grand scale.
Reporting from Reuters says that more than $275 billion — including $118 billion from the 2021 infrastructure law — has been allocated away from the general fund to pay for road repairs since 2008. The recouping of lost gas tax costs is not a new concept, with at least 19 states currently imposing increased registration fees on EV owners. Even states with high levels of EV adoption and electric-friendly policies, like California, Oregon, and Washington, all charge an annual fee to EV owners, ranging from $100–$150.
Newly minted Transportation Secretary Sean Duffy concurred with the principles of the legislation, as it would help with making good on a promise that President Donald Trump made during his campaign, but acknowledged that figuring out the mechanism for charging EV owners an equivalent gas tax cost was challenging. While Trump has frozen EV charging funds and is making moves to rescind certain emissions regulations and efficiency benchmarks, the introduction of this legislation appears to be the bidding of his party allies in Congress. We'll have to wait and see how this bill makes its way through the Senate and its subcommittees, but a Republican majority in the Senate means these rules likely have a fighting chance.
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