Fuel follies ... Three seeds for the price of one!
There's something about motor vehicles that drives legislators insane.
... oh, wait... that assumes they were once sane...
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Maine Says EV and Hybrid Owners Don't Pay Their Fair Share in Road Tax
A proposed new fee for hybrids and EVs in Maine could be the highest in the country, reduce clean vehicle adoption.
The Maine Department of Transportation wants to add an annual registration fee for hybrids and electric vehicles. $150 for hybrids, and $250 for electric models. The DOT is looking to impose the fee because they say that drivers of the more energy efficient vehicles aren?t paying their fair share toward road maintenance.
The owners of these types of vehicles are paying far less in the gas tax than other vehicle owners and they are using the highway system just like any others,? MDOT Manager of Legislated Services Megan Russo told the Portland Press-Herald. ?There has got to be a way to try and capture revenue from those drivers who are using our road system.?
Despite a 30-cent tax per gallon of gas, Maine?s highway maintenance is underfunded by $60 million per year. Officials know that this new fee won?t solve the problem, but it will help.
?We think drivers should be paying some sort of fee, let?s talk about what amount would be appropriate,? Russo said.
Hybrid and electric vehicles make up less than three percent of the vehicles on Maine roads. There are about 19,450 of in the state, according to the Bureau of Motor Vehicles. That means that the proposed fees would raise approximately $2.9 million per year toward the road maintenance budget.
Maine wouldn?t be the first state to put a fee on electrified cars. Eighteen other states have registration fees ranging from $30 to $100 for hybrids and $50 to $200 for electrics.
Owners and conservation groups were not happy with the proposed fees, saying that they were being targeted by the legislation.
?I feel like I am being punished if this bill goes through because I am doing the right thing,? Gretchen Ebbesson-Keegan, a retired teacher, told the Press-Herald.
Ebbesson-Keegan drives a nine-year-old Toyota Prius.
The Sierra Club Maine has called the fees unreasonable and punitive toward electrified vehicle owners.
?Gas-burning vehicles are a major source of toxic air pollution and the largest source of carbon pollution in Maine. Levying a tax on cleaner cars is counter-productive to the state?s interest in reducing car pollution. One state that imposed high fees on EVs, for example, learned this the hard way,? said Sierra Club Maine Transportation Team Chair Tony Donovan last year.
Donovan was referring to Georgia when he said that a state learned the hard way. That state moved from one of the highest EV incentives to a $200 per year EV fee and saw EV sales drop by 80 percent.
The new fees would see the owner of a hybrid or electric vehicle paying more for road use than most ICE vehicle drivers. At $250 per year, an EV would pay about the same in fees as the driver of a vehicle that gets just 18 miles per gallon over 15,000 miles.
The LePage administration in Maine has floated other legislation to help pay for road maintenance. A bill was proposed that would redirect some of the sales tax on car and car part purchases to the highway fund, but it is unlikely to pass due to overall budget concerns. But don?t expect a gas tax increase to make sure that more efficient conventional cars pay their share.
?This administration has been very clear, they are opposed to a gas tax increase,? Russo said.
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Why Gas Taxes Aren't Paying the Bills Anymore
Revenue has been in decline for decades as electric cars, better mileage and driving less cut fuel consumption. What's next?
Pain for the pump.
Christopher Dilts/Bloomberg
As has been widely noted, the infrastructure spending plan unveiled by the White House this week doesn't include a lot of federal spending on infrastructure. This is not just a matter of ideology or timidity on the administration's part. It's also a reflection of the fact that the biggest source of money for federal infrastructure spending -- the motor fuel tax revenue that flows into the Highway Trust Fund -- has been shrinking in real terms for almost two decades.
The decline is even more dramatic when measured in terms of gross domestic product.
Why is gas tax revenue -- especially federal gas tax revenue -- shrinking? One obvious answer is that, in an economy with even modest inflation, it is designed to shrink. Motor fuel taxes in the U.S. are usually set not as percentages, like sales taxes, but as dollar amounts. The federal gas tax has been 18.4 cents a gallon, more or less, 2 since October 1993 (the revenue effect of that year's increase shows up belatedly in the above charts because for the first few years it was used for deficit reduction instead of transportation). Here's the federal gasoline excise tax rate expressed as a percentage of the price of a gallon of regular gas, going back to 1947.
A big part of the ups and downs in the above chart has to do with ups and downs in the price of gas, and this volatility is one reason why gas taxes generally aren't levied as a percentage of the price. Many states switched to percentage taxes during the oil crises of the 1970s and early 1980s, and they came to regret it when gas prices subsequently plummeted. There are ways to structure a gas tax that would increase with overall inflation but not jump around with every gas price move -- the Institute on Taxation and Economic Policy lays out the details of one such proposal here, if you're interested. Also, it is politically possible simply to raise the gas tax, as a majority of states have done in the past four years. President Donald Trump reportedly surprised lawmakers at a meeting Wednesday by saying he would support a whopping 25-cent gas tax increase.
That suggestion has the feel of a spur-of-the-moment trial balloon that could soon deflate, though. And there's this other, harder-to-fix problem with gas taxes, which is that gasoline consumption seems to have stopped rising.
The pronounced dip in gasoline consumption from 2007 to 2013 was the product of a dip in vehicle miles traveled in the U.S. that for a while had pundits proclaiming that younger Americans had turned away from cars. Since then, driving has rebounded, although on a per-capita basis Americans are still driving less than they did in 2005. Another thing keeping gasoline consumption from rising is improved fuel mileage:
Average fuel efficiency dropped from 2008 to 2011 in part because economic hard times led people to hold on to older cars -- the fuel efficiency of new cars and light trucks has generally kept rising. Another issue is when low fuel prices and changing fashions lead Americans to choose pickups and sport utility vehicles over more-fuel-efficient cars. That happened in the 1990s, and it appears to be happening again. This time around, light trucks are subject to tougher fuel-efficiency standards than they were in the 1990s, but those could be relaxed if Republicans maintain control of the White House and Congress for a while.
In other words, these trends aren't inevitable. It is possible to imagine some combination of low gas prices driven by increased U.S. oil production, fuel-efficiency rollbacks, and an extended economic boom driving more fuel-tax revenue into the Highway Trust Fund. But it is also possible to imagine increasing uptake of electric cars actually driving gasoline consumption down, as Amir El-Sibaie of the Tax Foundation did in an analysis published this week:
While the gas tax may be a suitable policy tool now, as there are currently only about 2 million electric vehicles worldwide, new predictive models such as the Bloomberg New Energy Finance (BNEF) forecast predict that comparable electric vehicles may be as cheap as gasoline vehicles by 2025. Additionally, electric vehicle sales are forecast to overtake traditional internal combustion engine vehicle sales by 2038. The market for heavy-duty vehicles is similarly being shaken up by electric vehicles, with recent announcements from Tesla regarding their Tesla Semi causing rival automotive manufacturers to similarly announce plans.
In reality, the gas tax is already falling short as a policy tool -- and boosting the tax by 25 cents or some other amount might accelerate its decline by pushing even more buyers toward electric cars. As Robert S. Kirk and William J. Mallett of the Congressional Research Service explain in a January report that was the chief inspiration for this column, Congress has since 2008 been financing transportation spending "by supplementing fuel tax revenues with transfers from the U.S. Treasury general funds." While I guess there's no reason in principle why highway funding shouldn't come from income taxes and other sources, it seems problematic because (1) it entails battling for scarce funds with lots of other government endeavors and (2) it means road users are no longer paying the full cost of building and maintaining the roads they use.
The motor fuels tax isn't exactly a user fee for drivers. Since 1983, some of it (16 percent currently) has been funneled to public transportation, and the revenue has probably never come close to compensating for the full environmental costs imposed by automobiles. But it has been a reasonably successful and durable means of paying for roads, bridges and other useful transportation infrastructure. Now that it is endangered, one obvious replacement would be a more explicit user fee that charges drivers for driving.
A few years ago, there was a flurry of interest in comprehensive user-fee systems that used global positioning system devices to track every mile that everyone drove. But the Netherlands, which was leading the way in this, backed off because of widespread privacy concerns, and interest elsewhere subsequently faded. Several other European countries do charge large commercial vehicles such as trucks and buses for every mile driven, according to a recent rundown by the Congressional Research Service, and New Zealand has a per-kilometer user fee for both trucks and cars that relies on odometer readings. In the U.S., the main innovation so far has been increased use of tolls, which thanks to transponders and license-plate cameras have become a lot easier to collect.
The White House infrastructure plan recommends accelerating this shift to toll roads by giving states much more leeway to charge tolls on interstate highways and reinvest the proceeds in other transportation infrastructure. Senate Minority Leader Chuck Schumer promptly labeled these "Trump tolls" -- guessing, probably correctly, that they won't be popular. Meanwhile, New York Governor Andrew Cuomo's proposal for a congestion charge on drivers in Manhattan south of 60th Street isn't exactly meeting with universal acclaim. But with gas tax revenue on the wane, something (or, more to the point, somebody) does have to give.
Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of ?The Myth of the Rational Market.?
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by Justin Fox
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Dirtier than VW dieselgate: EPA expands loophole for rebuilt trucks
'Gliders' pollution far exceeds all emissions from Volkswagen scandal
Reuters
A newly expanded federal loophole is fueling the growth of semi trucks retrofitted with rebuilt, older engines that produce diesel emissions far greater than the combined emissions of all Volkswagen diesels equipped with fraudulent emissions controls, a New York Times investigation shows.
The trucks, which use new truck bodies from Peterbilt, Freightliner and other manufacturers mated to rebuilt engines exempt from pollution standards, are known as "gliders." They're cheaper than semis equipped with modern, emissions-compliant engines, may get higher fuel economy and are less expensive to repair and maintain. But they emit toxins and tiny dust and soot particles blamed for causing asthma, lung cancer and other diseases. And their ranks are growing, with about 10,000 sold in 2015, the last year for which data are available, up from fewer than 1,000 in 2010.
An analysis by staff members at the U.S. Environmental Protection Agency found that gliders emitted nitrogen oxide levels during highway driving that were 43 times as high as those from trucks with modern emissions-control systems. The EPA staff estimated that one year's worth of glider sales released 13 times as much of the pollutant as all VW diesels equipped with the emissions-cheating software ? and that was scandal that resulted in a criminal case against the company and more than $4 billion in fines.
The trucks pollute so heavily, in fact, that in stop-and-go traffic, filters clogged with particulate matter forced testing equipment to shut down.
The Obama administration had proposed to eliminate the loophole by enacting a stricter diesel emissions rule that was scheduled to take effect last month. But Scott Pruitt, the Trump administration's head of the EPA, granted an exemption to the rule, thanks in part to: a controversial study by Tennessee Technological University that exonerated glider emissions; U.S. Rep. Diane Black, a Republican who is running to be the state's governor; and the financial support of the Fitzgerald family, which operates several dealerships selling the rebuilt semi trucks ? Fitzgerald business entities, executives and family members have contributed at least $225,000 to Black's campaign. Fitzgerald also paid for that Tennessee Tech study, which is under internal investigation by the university.
Pruitt is also proposing to repeal the cap limiting the number of gliders that can be sold each year.
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These three seemed to go together. If you find one interesting, you'll probably enjoy the others, too.
So, Maine, eliminate all of the state taxes you enforce and roll them into a sales tax. Frankly, every state and the Federal government should just put down a sales tax that encompasses all of that level's taxes. Local governments would have the choice of any sort of taxation as each community has different needs. I know some places in PA and Oregon that don't have many stores so a sales tax would be unfeasible for them. However, each state and the Federal government would be able to enact a sales tax that encompasses all fees and other taxes the state or Federal government normally enacts.
Heck, sales taxes, if done properly would fall on the middle and upper classes for the most part. That means that the taxes should mainly be placed on luxury items not basic necessities. Let's say you are a married couple and you buy a home. You don't need a 2, 3, 4, or more bedroom home to live; so, you would pay a sales tax on homes with more than 1 bedroom. You can argue that a 1 and a half bathroom house might be needed though, so if it is a 1 bedroom home with 1 and a half bathrooms, then it wouldn't be taxed when sold. However, all cars can be considered luxury items as they are not necessarily needed to live. People can carpool or take mass transportation in place of owning a vehicle, so all vehicles would be taxed when sold.
What sales taxes do is hit just about everyone that buys or sells anything in the state or country. This will include illegal immigrants whom are paid under the table, and people whom use welfare money to buy vehicles or other non-necessities. This is why when people say they are against sales taxes, because they would hurt the poor; they are being dishonest. The sales tax has to be properly enacted and placed on those things that are not necessary for a person to live on. Then, you have no reason to complain about someone not paying their fair share.