Electric Cars Don’t Pay Gas Taxes: So What? – CleanTechnica

Posted: Wednesday, December 30, 2015

Air Quality
Screen Shot 2015-12-27 at 12.41.57 PM

Published on December 30th, 2015 |
by Mike Barnard


December 30th, 2015 by  

Is it a sin that electric car owners don’t pay gas taxes? No, not at all, but you’d never know it listening to some people squawk. There are anti-electric car types who think this is a huge deal, instead of kind of an embarrassing story for internal combustion cars. Let’s tear it apart and see, shall we?

The gas tax is pretty cheap per person

The average US gas tax is about 48.7 cents per gallon. At the average 13,476 miles US citizens drive, assuming 20 miles per gallon, that comes out to $328 annually. If they drive fuel efficient cars, it obviously goes down. For example, at the current highly theoretical average of 25 miles per gallon, the average person pays about $263. If they drive a car that manages 30 miles per gallon, they are down to $218. According to the logic of electric car haters, fuel efficient cars are getting an unfair ride, too.

The gas taxes don’t pay for the roads and highways:

“your gas taxes don’t cover the cost of roads and highways. Since the interstate system was implemented in 1947, US spending on highways has exceeded the amount collected from fuel and vehicle fees by more than $600 billion. Where has the rest of that money come from? Mostly bonds, property taxes, and the general fund. So even if you don’t drive, you’re paying for highways, a type of infrastructure that only cars can use. Roads in your city are generally financed through local, property, and sales taxes”

Well, that’s kind of annoying, isn’t it? Taxes levied to pay for roads don’t actually cover their costs. Actually, they don’t even begin to cover the costs. So electric cars not paying the small amount that purchasing gas contributes to road maintenance is a bit of a non-issue. Society is subsidizing roads big time.

Air pollution from internal combustion cars has serious health-related costs:

“The OECD has estimated that people in its 34 Member countries would be willing to pay USD 1.7 trillion to avoid deaths caused by air pollution. Road transport is likely responsible for about half.”

The Organisation for Economic Co-operation and Development Electric represents most of what we consider the developed world, including the USA, UK, Australia, Canada, and 30 other countries. China and India aren’t members, so this isn’t about places with terrible pollution — this is about your street corner.

Electric cars emit no particulate matter or chemical pollution in urban areas. As the Union of Concerned Scientists pointed out recently, you have to get deep into coal country before pure electric cars are as polluting as even the most efficient of hybrids. Even there, it is entirely possible to buy entirely pollution-free electricity from renewables in most places, and a larger percentage of electric car owners do that than the general public.

Collisions due to vehicles are subsidized from the public purse:

“Public revenues paid for roughly 7 percent of all motor vehicle crash costs, costing tax payers $18 billion in 2010, the equivalent of over $156 in added taxes for every household in the United States.”

Since Teslas are leading the way in making driving safer through autonomy, that’s yet another societal value proposition that they are advancing. This one by itself is worth half of the $300 that the gas taxes cost, according to these numbers.

Climate change is costly, and internal combustion vehicles don’t bear that cost:

“Four global warming impacts alone—hurricane damage, real estate losses, energy costs, and water costs—will come with a price tag of 1.8 percent of U.S. GDP, or almost $1.9 trillion annually (in today’s dollars) by 2100.”

Obviously, electric cars are part of the answer to climate change, not a major contributing factor as internal combustion cars are. The argument that electric cars aren’t paying their fair share is just getting more and more embarrassing for people who make it, isn’t it?

Internal combustions engines make noise, and traffic noise makes people less healthy:

“The social costs of traffic noise in EU22 are more than €40 billion per year, and passenger cars and lorries (trucks) are responsible for bulk of costs. Traffic noise alone is harming the health of almost every third person in the WHO European Region. One in five Europeans is regularly exposed to sound levels at night that could significantly damage health.”

Of course, electric cars make much, much less noise than internal combustion vehicles and so reduce this health cost as well. Despite this, the USA is absurdly trying to regulate electric vehicles to make more noise than most internal combustion vehicles instead of sensibly forcing older vehicles to get quieter.

What does this net out to?

Screen Shot 2015-12-27 at 12.41.57 PMThe City of Vancouver did a societal cost analysis of various forms of commuting that is worth looking at. The study was done when the Canadian dollar was close to at par with the US dollar, so this holds roughly true for the USA. Five kilometres is just over three miles, to give a sense of scale for people living in the USA.

Electric cars, especially ones with autonomous features, save a portion of that societal cost. Let’s extend that cost for cars to a full year’s driving for the average US citizen. Americans drives an average of 13,476 per year, or 21,688 kilometres. That means that the average societal cost per US citizen of car driving is about $12,000 per year.

Screen Shot 2015-12-29 at 10.30.08 PMThe underlying data from the Vancouver study shows that the portion of costs avoided by electric cars represent about 37% of the total, or about $4,440 per year. Remember that $300 for someone getting about 20 miles per gallon? That’s less than 7% of the value that an electric car provides every single year.

Let’s extend this saving over a decade of car life. That’s about $44,400 of societal value given back. That’s money that could be spent on hospitals or school or just not paid in taxes. Or even used to maintain roads and bridges, if someone wanted to do that.

Electric cars are a huge economic win for the societies that promote them. Making the claim that electric cars are somehow subsidized by not paying gas taxes when the opposite is actually true — that car drivers are heavily subsidized already and electric cars reduce that societal subsidy — is evidence of heavy blinkers. 
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About the Author

For the past several years Mike has been analyzing and publishing reports and articles on decarbonization technologies, business models and policies. His pieces on electrical generation transformation and electrification of transportation have been published in CleanTechnica, Newsweek, Slate, Forbes, Huffington Post, Quartz, RenewEconomy, RenewablesInternational and Gizmag, as well as included in a textbooks. Third-party articles on his analyses and interviews with Mike have been published in dozens of news sites globally and have reached #1 on Reddit Science. Much of his work originates on Quora.com, where Mike has been a Top Writer annually since 2012. He also has published a climate-fiction novel, Guangzhou Future Tense.

  • This is literally one of the worst analysis I’ve ever seen. It is so biased towards electric vehicles and cherry-picks factoids to a level which should be embarrassing to the author and insults the intelligence of the reader. To rail against IC engines while simultaneously lauding electricity consumption and not acknowledging that there are serious externalities associated with electricity generation, which society also bares, is disingenuous at best and malicious at worst. The last two “points” about road noise and vehicle collisions aren’t even real points for crying out loud! Most traffic noise from freeways, etc. is from tires (not engines) and the tacit notion in your article that only EV’s could benefit from safety advances through autonomy is preposterous. Furthermore, the argument made by those concerned about EV’s not paying gas taxes (a concern I personally also believe is not worth worrying about) is ultimately a concern that the money for roads has to come from somewhere and that lost tax revenue is lost revenue no matter how you justify or rationalize it.

  • 1) EV’s should pay road taxes

    2) The ICE Congress boys got a hold of this and increased what they should be paying 10-100x to make EV’s look bad on purpose.

    What they do is look at cost of driving formulas, then magically make the EV tax a number that just puts them over the cost of driving vs. ICE’s.


    Robber Baron politics 101. When your business model starts losing, cheat.

  • Besides, once all cars are electric, road pricing can be introduced to pay for highways.

    Or can anyone tell me why we have lawmakers at all? If laws would not need to be adapted from time to time (for example, due to technical progress), what do we need them for?

  • I think the article misses the big picture that as growth in electric vehicles shifts from being more of a novelty to mainstream, it’s going to create a shortfall in highway funding.

    In the US state where I live, 100 percent of the gas tax is dedicated to roads. True, the tax doesn’t cover the entire cost, but if covers a significant portion. Assuming the inevitability of many more electric vehicles hitting the streets, the lost revenue from the gas tax will become significant. Now is a good time to begin thinking about how to solve that problem.

    • Well, given we’ll need to spend less money on health-related illness from air pollution, there will be more money there.

      It is also reasonable to suggest that since EVs powered by RE are going to be far cheaper than our current FF landscape, perhaps there could be some small increases in income tax to help pay for shared infrastructure?

    • No you missed the point. The USA gas tax has never funded the highways. It covered only a small portion of new construction. There has been a short fall for years.
      But you are correct we need to update the system.
      1) Double the gas tax then raise it 10% per year.
      2) Add a fee on all vehicles. Charged each year to get plate, based weight cubed and miles driven. That way the more you drive and the heavy the vehicle the more you pay. A 20x increase in weight gives a 9600x increase in road wear.
      So that massive semi should pay a lot more than a SUV which is more that a small car which is more than a motorcycle.

      • And if the money collected exceeds what is needed for roads, then use it to pay for medical costs, and reduce some other tax. One last thing. Been on some really nice car lane wide paved trails that even include a barrier when going across bridges between you and car traffic in Florida. Made me realize that transportation infrastructure where I live is totally discriminatory against pedestrians and bicycles, and favors cars, which seems dumb. My favorite solution is a single full sized lane, wide enough for an ambulance.

  • EV critics are often the first to point out that EV’s are currently expensive and the people who buy them are more likely to be well off which means your average EV owner today likely pays enough money in taxes already in a year to put that $263 figure to shame.

  • Great analysis, will keep this one bookmarked as I’ve heard this argument quite often recently.

  • Way to go Vancouver! Make those external societal costs visible. The hidden subsidies for oil and gas industry should be part of this conversation.

    Also. I hope in “infrastrucrure” costs they figured in parking. Few folks realize this, but cities spend a great deal of money to pave acres of roadway, and a good chunk of that is used by all of us to park our cars, and we take street parking for granted.

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      • Please remove your garbage from this thread


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