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Fourth state is set to adopt mileage-based usage fees for EV

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Market Trends | Technology
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Hawaii’s mileage-based road usage legislation is set to take effect July 1, renewing discussions on the merit of the taxation approach.

The Aloha State’s Senate Bill 1534 eliminates a $50 annual state registration surcharge for electric vehicles (EV), instead allowing owners to pay a registration surcharge or per-mile road usage fee through June 2028.Drivers who choose the per-mile road usage fee are required to provide the state with odometer readings.

Such programs are intended to help states recoup money from lost fuel taxes as more drivers transition to EVs.

However, concerns have been raised related to how states can determine whether miles logged were traveled within state borders. Privacy concerns have also been raised related to giving governments the ability to pull data from vehicles as part of such mileage-based initiatives.

In April, Washington Gov. Jay Inslee nixed a bill that would have allowed drivers to voluntarily share their odometer readings “for the purpose of gaining more accurate information on vehicle miles traveled in the state.”

Inslee said in a letter to lawmakers that he rejected House Bill 1736 because it “presupposes a future per-mile program as an alternative transportation funding mechanism.”

Wayne Weikel, state government affairs vice president of the Alliance for Automotive Innovation (Auto Innovators), addressed the issue recently in a letter sent to Pennsylvania’s Chairman of the House Committee on Transportation.

Although Weikel’s letter spoke to Pennsylvania road funding needs, it also described Auto Innovators’ approach to vehicle miles traveled (VMT) tax more broadly. He said that while VMA tax can help generate revenue, the benefits must be weighed against the challenges.

“VMT taxes carry a much higher administrative burden on state officials to both correctly set rates and tabulate roadway usage,” Weikel wrote. “To avoid legal challenges on the ability of the Commonwealth to apply a tax on miles driven outside the state, monitoring of a vehicle’s location in real-time may be necessary, which introduces considerable privacy concerns during a period of heightened attention to government collection of personal information.

“Additionally, like an EV fee, a VMT tax does not capture drivers crossing through the state from another state. And perhaps, most importantly, VMT taxes are generally disliked by the general public.”

Weikel referenced a San Jose University survey that showed about 60% of people opposed the idea of VMT taxation, with 40% of them “strongly opposing” it.

“As the auto industry pushes toward a more electrified future, we have great concern that such a tax applied only to [alternatively] fueled vehicles will add a substantial disincentive to consumers considering an EV purchase,” Weikel wrote.

Auto Innovators supports implementing a tax based on the number of kilowatts of electricity (kWh) used to charge an EV on high-speed charging infrastructure being installed along highway corridors.

Oregon, Utah, and Virginia are the only other states to generate tax dollars through VMT charges.

Oregon has hailed its OreGo pay-per-mile system as a way for the state to maintain funding for roads and bridges as gas-based taxation shrinks.

“States are struggling to pay for transportation. Fuel taxes become obsolete as we evolve toward a fully-electric fleet. Further, as state departments of transportation work to reduce their contributions to climate change, they are seeking alternative ways to generate funding that also help reduce greenhouse gas emissions,” Oregon’s Department of Transportation says on its website.

“A road usage charge is that solution. This new funding model weans us off fossil fuels using a modern, technology-based solution that combats climate change while assessing drivers fairly for their road use.”

Maureen Bock, who oversees the OreGo program, told Repairer Driven News that the initiative has not yet recouped enough fees to account for the reduction in gasoline taxes. However, she said she thinks “the program will be a good supplement to fuel taxes when it becomes a mandatory program.”

“Generally, the experience [among program participants] has been positive,” Bock said. “The Oregonians who participate have essentially been beta testing the system for us, and have provided us with feedback we use to make the program better.”

In Utah, a law took effect this year that allows EV drivers to participate in a voluntary program to pay per mile for their vehicle usage rather than paying a flat fee during their annual registration.

Virginia’s Department of Motor Vehicles said its Highway Use Fee is meant to help “make up for the fuel taxes that drivers with fuel-efficient and electric vehicles spend less on because they’re not using as much fuel.”

Drivers have the option of paying their registration in full while renewing their vehicle, or paying over time through HUF’s Mileage Choice Program.


Featured image credit: Alex Potemkin/iStock

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