One state is considering a mileage-based EV tax – here’s why that’s a bad idea

Lawmakers in Vermont are gearing up for a mileage-based EV tax. There are better ways to raise funds for roads and infrastructure.

Mileage-based EV tax

Vermont as a state is pro-EV – it’s actively incentivizing more environmentally-friendly transportation options through Drive Electric Vermont. The state is busy installing EV chargers, and its first Tesla center was unanimously approved by the city council in South Burlington in December.

However, the state estimates that it will miss out on about $1 million in revenue in 2023 due to the uptake of EVs and hybrids, according to the VT Digger, as the gas tax helps fund road maintenance and improvements.

So Vermont state legislators are now considering a bill, H.479, that proposes a mileage-based tax for electric vehicle owners to make up for this lost revenue. The tax would be based on the number of miles driven by the vehicle rather than the amount of gasoline used.

This proposal was passed in the House on March 30, read for the first time in the Senate, and referred to the Committee on Transportation.

Lawmakers are roughly aiming for July 2025 to launch a mileage-based EV tax because that’s when the state aims for 15% of all new vehicles to be fully electric or plug-in hybrids.

City Dwellers’s Take

Is this really the best way to skin the cat? We don’t think so.

How do you separate out miles driven out of state versus in-state? For example, I live on the New Hampshire/Vermont border on the Vermont side. My husband drives an EV to New Hampshire every day to go to work. People cross borders in these small states all the time. How do you accurately measure the number of miles driven in-state to ensure that EV owners are not unfairly burdened by the tax? And a tracking device is not going to be popular.

Mileage-based taxes could also disproportionately impact low-income drivers, as they may not have the means to pay a large fee based on the number of miles they drive, which could create an unfair burden. And people drive a lot here, for work or otherwise, due to the fact that it’s rural.

How about perhaps shifting the entire transportation fund away from gas and diesel and figuring out a better way to raise needed funds?

Why not calculate the taxes based on vehicle weight? According to a GAO study, an 80,000-pound 18-wheeler does 9,600 times more damage to roads than a 4,000-pound passenger vehicle. This can be completed when the vehicle is registered.

Eighty percent of EV owners charge their cars at home. People pay tax on their electric bills; why can’t the state tap into that extra tax income through the utilities?

The US has some of the lowest gas taxes in the world. As of February 2023, Vermont’s total state tax on gasoline was 33 cents a gallon and 32 cents for diesel, according to the US Energy Information Administration. How about raising the gas tax so that switching to an EV is further incentivized?

Of course, state roads and infrastructure need tax revenue for upkeep and improvements. Sierra Club Vermont calls the mileage-based fees idea “regressive,” and we agree. The EV mileage tax idea has too many holes, so it doesn’t feel like the right way to do it – in Vermont or anywhere else.

What do you think about mileage-based EV tax? Let us know in the comments below.

Photo: State of Vermont Agency of Commerce and Community Development

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