State economists say electric vehicles aren’t paying their fair share for road use

by | Aug 11, 2023



  • Florida’s revenue estimating conference is warning that a surge in electric vehicle (EV) use in Florida threatens gas tax revenue for state transportation projects.
  • One proposed solution, Senate Bill 1070, was unanimously passed by the Florida Senate, but rejected by Florida House Republicans who felt it was essentially a tax hike on EV owners.
  • Increasing EV adoption puts pressure on traditional gas tax revenue collection and demands innovative solutions for funding transportation projects in the state.

State economists are warning that an ongoing surge in electric vehicle (EV) use in Florida is poised to significantly undermine gasoline tax revenue, which provides funding for critical transportation-related projects and infrastructure. Findings by the Revenue Estimating Conference highlighted the anticipated significant growth in the EV market share in the upcoming decade, influenced by factors like affordable purchase prices, greater access to charging stations, and enhanced battery longevity.

State lawmakers attempted to address the projected shortfall earlier this year. The proposal, Senate Bill 1070, was unanimously approved by the Florida Senate, and sought to levy a flat fee on every electric vehicle owner, up to $200 per year, regardless of how often EV owners drove their cars on Florida roadways. But to Florida’s House Republicans, a flat fee might as well be a flat tax.  They completely ignored the Senate’s proposal, allowing it to die in the waning days of this year’s legislative session.

Now, the fate of SB 1070 only underscores the urgency of the Revenue Estimating Conference’s summary, which emphasized that as more Floridians opt for electric over gas-powered vehicles, there would be continued downward pressure on gas tax collections. The expected shift could jeopardize the state’s primary financial means of paying for transportation projects, including bridge and road maintenance programs, not to mention new construction. That means some sort of solution will need to be found – albeit perhaps a bit more creative than a simple flat tax.

Currently, Florida levies a gas tax of roughly 25 cents per gallon, appropriately collecting taxes based on how many miles each driver travels on Florida roadways. To predict fuel and tax statistics, economists often consider the “fleet miles per gallon,” wherein the “fleet” is all registered vehicles in the state. But with electric cars already putting pressure on the accuracy of the “fleet miles per gallon” formula, along with newer vehicles and their improved fuel economy metrics, better ideas are needed. In the coming years, Florida’s “fleet” will experience a massive improvement in “miles per gallon” performance, which will put a massive dent in fuel tax collections.

The problem isn’t just a Florida one. For years, American motorists have indirectly funded the maintenance of the roads they utilize through fuel taxes. The Congressional Budget Office, in 2021, deduced that the static federal tax of 18.4 cents per gallon isn’t going to keep up with the rate of inflation and the reduced collections due to EV’s and more efficient cars in general. Given current trajectories, the federal Highway Trust Fund might face a whopping $140 billion deficit by 2031.

But Florida’s situation is perhaps even more serious because, unlike the federal government, the Sunshine State can’t literally print money, and the state has one of the nation’s higher gasoline taxes – in other words, Florida relies more heavily on gasoline taxes than other states – combined with the second-largest number of registered EVs. That’s a significantly troubling combination and one that will have to be addressed.

1 Comment

  1. Skip

    So put a credit card reader on the pumps like you do on gas pumps. The difference would be for electric and electric/gas tax for Federal and State taxes. If they recharge at home they are already paying tax on their home electric bill.

 

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