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Utah mulls commercial EV charging tax, lowering gas tax

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Utah has joined other state lawmakers in amending laws to make money off of electric vehicle (EV) use to put toward road construction and maintenance.

Lawmakers in the state are considering a tax on businesses that sell electricity through EV chargers.

House Bill 0301 imposes a 12.5% tax on the sale of electricity, which doesn’t apply to the use of home charges, and at businesses that allow free public use.

Bill sponsor Rep. Mike Schultz explained to the House last week that “the main purpose of the bill is to charge the people that are going through our state.”

“There was a bunch of federal money put out to put charging stations all up and down the corridors on our freeways,” he said, referring to the Biden Administration’s Bipartisan Infrastructure Law. “We all know that Utah is the crossroads of the West. We are one of the states that has the most traffic moving through it that are non-residents and so with electric vehicles, those non-residents [are] moving through our state putting the burden on our system… [and] not fair to the residents who have to pay for the roads.”

The infrastructure law included $7.5 billion for charging infrastructure and the Inflation Reduction Act provides tax credits of up to $7,500 for the purchase of EVs. However, S&P Global Mobility data released in January shows charging infrastructure is not nearly robust enough to fully support a maturing EV market.

If passed, the Utah bill would require residents to pay more for all vehicle registrations, including EVs, beginning Jan. 1, 2024. The fees would be increased by $5 bringing the cost to $21.75 for each hybrid EV and $56.50 for each plug-in hybrid EV.

The third element of the bill, and what Schultz told the House is “probably the most important” is the reduction of Utah’s gas tax by 2 cents beginning July 1.

“The gas tax has increased much faster than any of us thought that it would so I think with inflation and everything else going on I think this is the proper thing to do… not take as much money on the gas tax as we move forward,” he said.

The tax will “continue to ratchet up” each year but by 2 cents less each time compared to the current rate and 2 cents will be added back to the tax rate in 2028, according to Schultz.

According to the bill, the statewide average price per gallon would drop from 16.5% to 14.2%. Beginning on July 1, the bill would cap off the price per gallon at $2.43 then on Jan. 1 at $2.57 per gallon, $2.71 on Jan. 1, 2025, $2.82 on Jan. 1, 2026 then $2.96 on Jan. 1, 2028, and thereafter.

All of the revenue collected through the bill, should it become law, would go into the state’s Transportation Fund for use in road maintenance and construction.

The House passed the bill with a 56-11-8 vote and passed it on to the Senate, which sent it to its Revenue and Taxation Committee for a recommendation on Feb. 16.

Anderson Economic Group said in its recent study on costs at the pump versus EV charging that Q4 2022 brought relief to ICE drivers as the cost to drive 100 miles decreased by more than $2.

“With the cost for electricity also trending upward during the year, mid-priced ICE cars became more economical to fuel than their Electric Vehicle (EV) counterparts for the first time in 18 months,” the group wrote. “In Q4 2022, typical mid-priced ICE car drivers paid about $11.29 to fuel their vehicles for 100 miles of driving. That cost was around $0.31 cheaper than the amount paid by mid-priced EV drivers charging mostly at home, and over $3 less than the cost borne by comparable EV drivers charging commercially.”

However, Anderson also found that luxury EVs continued to have a fueling cost advantage, regardless of charging method, though assuming mostly home charging, the cost compared to a luxury ICE vehicle dropped from $11.20 per 100 miles to $7.56. As for pickup trucks and “entry-priced” cars, the study found that ICE vehicles “are still the only widely available options.”

All use cases reflect 12,000 miles driver per year, with the cost of residential charging equipment amortized over five years. Calculations are based on energy prices and taxes in the state of Michigan. Benchmarks for ICE vehicle drivers assume the use of commercial gas stations. For EV drivers, Anderson considers both drivers who routinely charge at home and those who rely primarily on commercial chargers.

“The run-up in gas prices made EVs look like a bargain during much of 2021 and 2022,” said AEG’s Patrick Anderson. “With electric prices going up and gas prices declining, drivers of traditional ICE vehicles saved a little bit of money in the last quarter of 2022.”


Featured image credit: Khanchit Khirisutchalual/iStock

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