Drivers of electric vehicles are getting a free ride when it comes to road taxes. While some countries apply a road tax to vehicles, in Canada the levy is in the form of a tax on gas. But EV owners currently pay nothing, since they never have to purchase gas. They get to drive on public roads without sharing in the cost of their upkeep - for now.
Gas taxes vary by province, but on average, Canadians pay 32.5 cents in taxes for every litre of gasoline sold. It can get expensive - on 50 litres of gas, it represents $16 of the cost of the fill.
I fully expect the different levels of government will address this new loophole in time, but the question becomes what and how to tax EVs.
As we all know, governments want to encourage people to adopt the new vehicles. They offer a number of advantages that people like:
- No pollution - people in cities can breathe easier without vehicle exhaust. Potentially people will be healthier, with fewer respiratory ailments, resulting in lower health costs.
- Oil dependency - EVs don't use gas, resulting in less dependence on a non-renewable energy source. This unused oil can be sold to other countries, bringing home more export dollars.
- Noise pollution - unlike internal combustion engines, electric motors are virtually noiseless, a key component to making urban living bearable.
But we all should pay our fair share. But what formula is fair without discouraging the continued adoption of EV?
In the United Kingdom, road taxes are on a sliding scale based on the grams of carbon dioxide a car produces. As EVs don't produce any, EVs get a free ride. Conversely, a high polluter has to pay a high premium for their continued use.
Oregon, Kansas and Arizona are proposing a per-mile charge, with an on-board GPS keeping tabs on drivers.
Washington state has proposed a flat $100 annual tax.
Regardless of the method and formula, some sort of road tax is necessary - and needs to be fair to all.
The next question would be the hybrids, including the upcoming plug-in hybrids. Some of these vehicles act in the same manner as an EV for shorter distances and use a fraction of the fuel of a conventional vehicle. Should these now have a partial tax for the loss of revenue from using less gas than most cars on the road?
Obviously nobody likes to pay taxes, but it is just as important that drivers contribute enough funds to continue to build and maintain the roads and highways on which all cars, regardless of the fuel used to power them, travel on.
With the tiny numbers of EVs on the road, the question of taxation is not an issue yet. In fact, EVs are enjoying government (and taxpayer) incentives to encourage people to adopt the new technology. Currently, three provinces - British Columbia, Ontario and Quebec - offer cash incentives that range from $5,000 to $8,500.
If the incentives to early adopters of hybrids are any indication (they got a $2,000 rebate on their purchase), it may be a year or two before all the funds to buy electric cars dry up.
Perhaps by then, EV owners and the government will have a better idea as to the best way to have EV owners pay their fair share of road costs.
But until then, early adopters of EVs can enjoy (somewhat guiltily) a free ride.
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