Roads cost money. Lots of money. In 2019, the state of Utah spent over $1.3 billion on road maintenance and construction. With a booming population and strong economic growth, those costs will continue to grow. The majority of the revenue that funds maintenance and operations of our roads comes from gas tax. In the tax policy realm, this has always been viewed as a “user fee” form of taxation. The more you drive and wear out the roads, the more gas you buy, and as part of that gas purchase, the more tax or “user fee” you pay. If you drive less, you pay less. That is a fair system.
Let me walk you through the math. In 2021, the gas tax in Utah is 49.5 cents to be exact (31.1 cents state and 18.4 cents federal). According to UDOT, the average vehicle in Utah is driven 15,542 miles per year. Utah drivers drive about 15% more miles per year than the national average (using the national average for creating Utah policy is not appropriate). In addition, Utah’s fleet (vehicles on the road) average 20 miles to the gallon (mpg). That computes to 772 gallons per year, totaling $381.36 coming out of the wallet of the average traditional fueled vehicle driver in Utah for gas tax.
Electric vehicles (EV) also use the roads. They don’t float. They don’t fly or levitate. They take up just as much space on I-15 as any other car. They use the roads no differently than traditional fueled vehicles. To try and compensate for this, drivers of those vehicles pay an additional annual fee at registration each year as a replacement for the gas tax. Those fees in 2021 range from $20 for gas hybrids to $120 for electric vehicles.
As a reminder, that’s $381 for traditional fuel vehicle drivers and $20 to $120 for the EVs and hybrids drivers. That is simply not fair.
Rep. Kay Christofferson (sponsor of House Bill 209) and the Utah Taxpayers Association understand that the environment and Utah’s air quality make a significant impact to Utah’s economy, and value efforts to protect resources we all use. This is why House Bill 209 still provides EV drivers a handsome discount for their efforts on air quality (37% to 57% less to be exact even after the bill goes into effect). However, HB 209 also makes it so that discounted road users pay a greater portion for the maintenance and operation of our transportation infrastructure, another important resource to strengthening our economy.
Unfortunately, opponents of the bill make the motive behind this legislation seem nefarious, which it is not. Several facts need to be pointed out relative to what opponents of the bill are saying.
In doing calculations for comparison, it is absolutely correct to use state and federal gas tax. Comparisons only using state gas tax to determine what gas vehicle drivers pay is inaccurate. First, gas vehicle drivers pay the federal tax each time they fill up - that alone should suffice. Second, all of that money and then some comes back to Utah in federal funding to be used for repaving and general maintenance, for example. There is a direct connection. To not include the federal share of the tax paid is unfair to taxpayers.
Also, opponents of the bill consistently argue that the average miles per gallon used in the calculations for comparison is incorrect. They cite numbers in the high 20s or even 30 mpg for new cars. It’s wrong to cherry pick the most fuel-efficient vehicles when examining the actual fleet of cars on Utah’s road. According to UDOT, the fleet is much older and the average mpg of the cars on the road is 20. Most drivers simply cannot afford to run out and buy a shiny new vehicle with better gas mileage. The $381 figure, which the average consumer pays in gas tax a year, is completely accurate.
Claims that EV sales will plummet if these fees are raised are simply hollow rhetoric. The oncoming tidal wave of EVs is not going to slow down. By 2035, General Motors has announced they won’t even be selling gas powered vehicles anymore. In Utah, purely electric vehicles are growing at an astonishing rate of 50% per year according to UDOT. In Georgia, even after they hiked their fees and eliminated a state tax credit in 2015, their EV sales jumped 147% year over year in 2018.
We need to remember that gas vehicle drivers pay gas tax every time they visit the gas station. Each time a traditional fueled vehicle driver fills up a 15 gallon tank, for example, they pay about $7.50 in gas tax, which probably isn’t considered by the average driver. That 49.5 cents per gallon tax is built into the price and is usually not even on the receipt or broken out from the cost you see at the pump. There is no tax collector standing there demanding payment, yet the tax is still paid by the driver. Contrary to traditional fueled vehicle drivers, who pay a higher amount throughout the course of a year, EV drivers pay the gas tax replacement fee all at once, making it feel like a tougher pill to swallow. This, despite the fact they still pay less than the average traditional fuel vehicle driver.
HB 209 is about paying for the use of the roads while not harming air quality. The latest version of HB 209 slowly phases in over the next three years an increase for EV’s from $120 to $240, from $52 to $180 for plug in hybrids and keeps gas hybrids at $20 per year. Even after those increases, alternate fueled vehicle drivers will be paying 37% to 57% less than the $381 gas vehicle drivers pay for using the roads.
In the case that alternate fuel vehicle drivers feel they drive even less than the average driver in Utah, the Legislature has a program in place to help. UDOT has a voluntary program called the Road Usage Charge (RUC) program, where alternate fuel vehicle drivers pay a cost per mile driven. HB 209 will give them incentive - if they drive less, to enroll in the RUC and pay less than the new flat fee. As EVs proliferate and soon become the dominant form of transportation in short order, this will ensure all drivers pay their share for using and wearing the roads. That is entirely fair.
Rusty Cannon is Vice President at the Utah Taxpayers Association