Hybrid and electric car tax increase is merely a user fee for state highways

October 18, 2018

 

Owners of hybrid and full electric vehicles in Mississippi are enraged at the Mississippi Legislature over  a tax increase that means they'll pay more to register their vehicles annually.

 

Most of them received a notice from the Mississippi Department of Revenue last month that informed owners that they'd be paying more. Hybrid owners will fork over an additional $75, while owners of electrics will pay $150 and the new tax went into effect this month.

 

No one likes paying higher taxes, but in the case of electrics, these owners have been getting a free ride on the backs of motorists who drive gasoline-powered cars and trucks. Gasoline taxes are the ultimate user fee. If you use the roads less, you pay less since you're not using as much gasoline.

 

Conversely, if you have a fuel-efficient car and rack up the miles or drive a gas-guzzling SUV the size of the aircraft carrier U.S.S. Nimitz, you pay more. 

 

The hybrid owners have a reason to be angry since they're already paying gasoline tax, but the owners of electrics should be paying some sort of user fee to lift their share of the road maintenance burden. 


The new tax can't be justified by numbers alone, as electric vehicles make up a tiny sliver of vehicles sold in Mississippi (198 sold in 2016 and 2017). According to Cleantechnica.com, electric cars represent only 1.74 percent of all sales in the U.S.


The new tax on electric cars isn't going to generate much in the way of revenue for highways, but from a fairness argument, it does make sense. Policymakers are going to have to come up with a new way of funding highway maintenance, as gasoline tax collections continue to shrink thanks to the increase in the fuel efficiency of the U.S. vehicle fleet and this is a first step toward that goal. 

 

There's also been some who said that the new tax will discourage people from buying hybrids and electrics. These critics say not only should we not be taxing hybrids and electric cars, but that we should duplicate other states that use the tax code to encourage their purchase.

 

The former can be justified on policy grounds, while the latter can not. The tax code is designed to fund vital government services, such as highway maintenance. It shouldn't be used to encourage or discourage behaviors in a form of government-mandated morality.

 

No one who can afford to buy a Tesla is going to be dissuaded by an extra $150 per year to register it.

 

There's the unstated political calculation with this tax increase that lawmakers believe those who drive hybrids and electrics aren't voting for Republicans. No Republican lawmaker would ever admit it, but try to remember the last time you saw a Trump-Pence sticker on the back of a Prius. 

 

Just don't believe a majority of Republican lawmakers when they tell you on the campaign trail that they didn't vote for a tax increase.  

 

Steve Wilson covers state and local government for the Mississippi Independent News Service. You can follow him on Facebook and on Twitter.

 

 

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