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A Tesla Roadster is charged at Tesla Motors Inc. in San Carlos, California in 2009. (Robert Galbraith/Reuters)
A Tesla Roadster is charged at Tesla Motors Inc. in San Carlos, California in 2009. (Robert Galbraith/Reuters)

Driving It Home

How should we tax electric vehicles? Add to ...

So, it is time to start slapping an extra tax on electric cars? That thought occurred to me as I wandered around the Toronto auto show, formally known as the Canadian International Auto Show.

On the 700 level in the South Metro Convention Centre, you’ll find a gaggle of electric or electrified runabouts all grazing about the auto show’s ECO-DRIVE showcase. The five all-battery cars: Ford Transit Connect Electric, Mitsubishi iMiEV, Nissan Leaf, Smart Fortwo Electric Drive and Tesla Roadster.

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Then we have the extended range electric ones – Chevrolet Volt, Fisker Karma, Toyota Prius Plug-in Hybrid or PHV. Regular ol’ hybrids include the Honda CR-Z, Hyundai Sonata Hybrid, Kia Optima Hybrid and the Porsche Panamera Hybrid.

Electrified vehicles are coming fast and they might start making some people furious when they think about the taxation issues. That is, pure electrics are already getting fat subsidies from three provincial governments – Ontario, Quebec and British Columbia. In the past, several provincial governments handed out the cash to hybrid buyers, too.

On top of that, politicians in Canada, the United States and many other countries are handing out money (direct subsidies and cut-rate loans) and rigging regulations to give an edge to electric vehicles versus other technologies that also improve fuel economy numbers and reduce emissions. Our politicians are in love with electrics.

This sort of regulatory push isn’t costing taxpayers so much now, but it will if electric and even electrified vehicles become mainstream in a big, big way.

In particular (and as The New York Times noted recently), drivers of pure electric vehicles don’t pay gas taxes at all. Instead, they get a taxpayer-funded giveaway. Hybrid drivers don’t pay as much to fill-up either. As I wandered around ECO-DRIVE land, I thought about the taxation side of any tale that sees EVs becoming something more than ultra-niche curiosities.

Here’s one question: Where are we going to get the money to pay for roads – to build and maintain them – if we’re collecting substantially less in fuel taxes at the pump?

As The Times notes, some U.S. states are looking at “alternative forms of taxation on EV drivers, like flat annual fees or levies based on the miles travelled.”

Washington, for instance, has passed a bill that, as The Times notes, would slap a $100 annual fee on electric car users. Oregon, Kansas and Arizona have also been toying with the laws that would impose fees on EV drivers in various ways, including charging a fee based on how much and how far an EV is driven.

Now EV supporters will argue that it’s too early to slap road fees and taxes on EVs just because their drivers don’t pay fuel taxes at the pump – that fees and government charges will hammer what is already a pretty slow rate of EV adoption in the marketplace.

But take a long look at all those EVs on ECO-DRIVE ally. What sort of fee or road tax is fair for EVs and the like? When is it time to have this discussion? And how long should taxpayers subsidize EV buyers and EV makers?

Follow on Twitter: @catocarguy

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